Monday 21 October 2019

Richard Curran: 'UK warnings on no-deal Brexit carnage came too late'

Full speed ahead: A float featuring an effigy of British Prime Minister Theresa May is seen prior to the annual Rose Monday Carnival parade in Dusseldorf, Germany. Photo: Getty
Full speed ahead: A float featuring an effigy of British Prime Minister Theresa May is seen prior to the annual Rose Monday Carnival parade in Dusseldorf, Germany. Photo: Getty
Richard Curran

Richard Curran

Senior executives of many businesses across the UK have been cowardly in their approach to explaining to the public the cost of a hard Brexit to their firm.

There has been a flood of warnings in the last few months about the very real, specific and painful costs of a no-deal Brexit. But it has been too little and possibly too late.

Brexiteer business figures from James Dyson to Wetherspoons pub chain founder Tim Martin, were vocal from the beginning about why they believed it was important to leave the EU.

In theory, Tim Martin ran the risk of alienating half of his customer base - but in fact his share price has doubled since the start of 2016.

On the remain side, business leaders hid behind the warnings of their industry bodies such as the Institute of Directors or the CBI. Unfortunately for them, lobby group warnings do not carry the same punch.

Now senior figures in business from the boss of Airbus and Aston Martin, to BMW, are predicting dire consequences for jobs.

It is possible they weighed up the pros and cons of speaking out sooner and decided to say very little until now. Make a stark warning about how you may have to move production or shed lots of jobs, and your share price could fall.

Many of them probably took a gamble that it would all be sorted out by now and things would never get this close to a no-deal crash-out Brexit.

Contrast the relative silence in the UK with many senior high-profile Irish business figures.

Michael O'Leary runs a publicly quoted multi-billion euro airline with huge business interests in the UK and a reliance on the performance of the British economy. He was predicting that airplanes wouldn't even take off unless something changed.

Even food companies in Ireland with a lot to lose have been open and frank about the implications without fearing the attention it could attract to their business and its vulnerability.

If the head of a lobby group like the CBI says a crash-out Brexit will be very bad for business, it simply doesn't register that much. Lobby groups are expected to complain about things and their analyses fitted very nicely into the Brexit chant that all bad news was part of 'Project Fear'.

But when the chief executive of a large corporation employing thousands of people comes out and says this will cost a lot of jobs and we will have to weigh up our future in this country, people sit up and take notice, not least the employees and those in the supply chain.

One can only presume many executives were making their concerns known privately to politicians. However, if the company is listed on the stock market, they would have to be very careful about what they could say privately to a politician about the real cost of Brexit to a business.

The business community did their analysis of what they thought would happen, and they got it wrong.

Too many Brexit myths have made it into the public consciousness and could serve to derail the chances of British voters coming up with a different result in any future second referendum.

A string of executives are now warning about the reality of a hard Brexit, but it has come after a hardening of attitudes among the British electorate many of whom just want to "get on with it".

As Brexit reaches a very important juncture next Tuesday, with the next big vote on UK Prime Minister Theresa May's deal, Irish businesses have to ask themselves what exactly are they hoping for?

When the speaker of the House of Commons John Bercow announces the result of the vote some time next Tuesday evening, what result should we want?

The vast majority of Irish people want there to be no Brexit at all. However, the road which leads to that destination is very hard to see right now.

Given that Ms May's deal offers a transition period, the backstop and the basis for a reasonably close relationship between the EU and the UK into the future, many of us might be happy to settle for her deal to pass.

If it passes, we have to bear in mind it will only be the beginning of long, drawn-out trade negotiations for several years to come in which the Irish Government will be using whatever influence it has to get the best deal for the UK.

While there is solid speculation that the EU will come up with something next week capable of securing more Tory votes than the last time, Ms May might only close the gap but not win the day.

If that happens, there will be a vote on taking a no deal off the table, which is likely to pass. There will be a vote on extending the March 29 deadline.

We could breathe a sigh of relief that no deal won't be happening but we will remain in the dark about what will happen. One scenario suggests that parliament will take a bigger role in the whole process. It has also been speculated that there is a (cross-party) majority in the House of Commons in favour of a softer Brexit with the UK staying in the customs union and possibly the single market.

Good for Ireland, but it is the outcome described by former Prime Minister Tony Blair as a "pointless Brexit". It could also completely fracture the political party structure that has dominated British politics for so long.

A softer Brexit would be very good news for Ireland, but nobody has any plans to put such a Brexit plan on the table. In recent weeks more people in Ireland are predicting an extension of Article 50, no progress in the extended period, and eventually the whole Brexit project drifts and never actually happens.

Wishful thinking for many of us, and at this stage it seems unlikely Ireland will get away that lightly.

Unfortunately, Irish business has to try and make sense of all of this. Some form of Brexit is on the cards eventually, even if a no-deal crash-out looks less likely than it did a few weeks ago.

In the coming days, the negotiators in London and Brussels will try to find a formula which enables some third-party arbitration mechanism which decides when the backstop can be replaced. Under the terms of the Withdrawal Agreement there has to be such a mechanism anyway to decide on disputes about interpretation of the deal. But the ultimate arbiter is the European Court. This will be very hard to sell to the ERG hardliners and the DUP, even if the latter appear to be looking for a way out of this mess while saying they achieved their aims.

Even the most-seasoned political observers in London are reluctant to say how many votes Ms May's 'improved' deal will secure next Tuesday. A temporary no-deal, crash-out cannot be ruled out. After crashing out, the UK would have to come to the negotiating table to map out a future trading relationship. But a lot of damage could be done to solid Irish businesses in the meantime.

One business adviser who works with SMEs told me there was total Brexit fatigue at this stage with the whole thing.

Gene Murtagh, chief executive of multibillion-euro Kingspan Group said he wants clarity before making decisions on Brexit. He said it was a risk to do nothing but making the wrong move was equally dangerous. More honesty from a senior executive of a major Irish company.

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