Leaving the European Union without a deal on future trade arrangements would be “not only wrong but irresponsible”, the head of the CBI is warning.
Paul Drechsler, the CBI president, says that if the UK is left to fall back on World Trade Organisation (WTO) rules after Brexit it will open up a “Pandora’s Box” of unforeseen consequences for the economy.
In a keynote speech in the City of London, Mr Drechsler warned that British firms would face tariffs on 90% of their exports to the EU products without an agreement as well as a raft of new regulatory hurdles to negotiate.
While some businesses were already preparing for such a “worst case scenario”, others were unable to do so because the costs were too high.
With Theresa May on course to invoke Article 50 marking the start of the formal process of withdrawal from the EU by the end of the month, Mr Drechsler highlighted the deep unease among the business community over what happens next.
“Right now, it feels like we’re just reaching the top of the Article 50 rollercoaster.
“Any minute now, maybe next week, maybe the week after that we’ll suddenly drop into the twists and turns of negotiations.”
Businesses on both sides of the Channel, he added, are concerned at the implications for future trade if the Government is unable to reach a deal with the remaining 27 member states.
“We should be under no illusions about what this would really mean.
“A ‘no deal’ scenario would open a Pandora’s Box of economic consequences.
“Here in the UK and across the continent firms are worried about this ‘worst-case scenario’.
“Some are getting ready for it to reduce economic damage.
“Some won’t prepare because they’re hoping for a deal.
“But in reality many firms can’t prepare because the cost of change is simply too high to even consider it.
“The Prime Minister is confident that a deal can be achieved - and we agree.
“But to those whose first and only choice is for Britain to walk away without a deal, I say you’re not only wrong but irresponsible.”
While Mrs May has expressed her determination to secure an agreement, she has also made clear that “no deal is better than a bad deal”.