UK could lose billions unless no-deal Brexit option removed, businesses warn

British business have called on politicians to take a hard Brexit off the table, warning that every region of the UK will suffer if the country quits the European Union without securing a deal first.

The CBI, which represents 190,000 UK businesses of all sizes and sectors, said that after analysing the government’s own figures, as well as assessing evidence from member firms, it had concluded that "no region or nation would be left untouched by the significant economic fallout from leaving the EU without a deal, harming jobs, livelihoods and living standards".

It believes a no-deal exit would cost the south east £28bn, the east of England £17bn, Wales £7bn and the north east £7bn. The pro-EU employers’ organisation said that the figures were based on an annual loss of output by 2034 relative to the status quo.

Carolyn Fairbairn, CBI director-general, said: “A March no-deal must be ruled out immediately. This is the only way to halt irreversible damage and restore business confidence.

“The best route back from the cliff edge is for politicians of all parties to start showing real flexibility. Only then will they find a path that can command support in the Commons, be successfully negotiated with the EU and protect the prosperity of communities across the UK.

“The UK is not, and cannot be, ready for a no-deal Brexit. Only Parliament can avoid it, and now is the time to do so.”

Earlier in January, MPs voted overwhelmingly to reject the exit deal agreed between Prime Minister Theresa May and Brussels. May is now looking to re-negotiate legal guarantees over the Irish backdrop. But she has warned that if her deal does not eventually win Parliament’s approval then a no-deal exit is the only remaining option.

She has also made it clear she does not support extending Article 50 nor a second referendum. A note by currency analysts at Rabobank, however, argued that an extension to the 29 March deadline could be yet be possible.

It said: “The pound has taken some comfort from news that a Brexit delay bill would likely be approved by lawmakers. This has been proposed by a cross-party group of MPs and would extend Article 50 if a deal was not in place by the end of February.

“While this would remove the prospect of a hard a Brexit, plenty of political uncertainty remains in the UK and this suggests that the coming week or so could be another rocky ride for the market.”

Rabobank argued that removing the risk of a hard Brexit would be “positive news for the pound”. But it also warned that increased “political wrangling” could hurt already weakened consumer sentiment. “The longer the political uncertainty drags on, the greater the impact on the real economy.”

It concluded: “We continue to forecast a move to €/£0.87 on a three-month view. This assumes that a Brexit deal will be found.”