A group of the world’s leading business federations from Japan to the US have warned Britain against crashing out of the European Union without a deal.
The organisations, representing four million companies from eight countries, say a no-deal Brexit would “create substantial disruption for businesses, workers, farmers and regulators” and has made them “gravely concerned”.
The joint letter, co-ordinated by the US Chamber of Commerce, reveals for the first time the damage no-deal would do to Britain’s standing on the global business circuit. Companies from the signatory countries invested £48 billion in the UK in 2017 but future spending would be at risk, they said.
They called for “an agreement that includes a meaningful transition period”, in an echo of the arguments made by UK business groups. The letter raises the stakes, however, particularly as it represents American businesses and warns that a messy Brexit would jeopardise the UK’s ability to strike trade deals.
“Walking away abruptly from treaty obligations with its largest trading partner also sends concerning signals to others considering bilateral agreements in the future,” the organisations claimed.
As well as the US, the other business federations represented are from Australia, Brazil, Canada, Egypt, New Zealand and South Korea, all of which the UK hopes to do trade deals with in future.
“The prospect of lengthy waits at the border, restrictions on intra-company transfers of workers, the fragmentation of regulations and standards, and doubts about free flows of data and e-commerce represent significant risks,” they wrote.
“Firms would be forced to make decisions about supply chains and investments in the UK without knowing what the future terms of trade will be. Significant potential changes to the UK’s immigration policy raise concerns as well.”
The letter was released on another day of turmoil in the currency markets during which sterling fell below $1.20 to a three-year low of $1.1959 before recovering to $1.2083 after the defection of a Tory MP to the Liberal Democrats cost Boris Johnson, the prime minister, his parliamentary majority.
The prospect of Jeremy Corbyn becoming prime minister is no longer unthinkable in the City, according to Oliver Harvey, an analyst at Deutsche Bank. “We see the magnitude of economic damage caused by a no-deal Brexit as much higher than policies proposed in the last Labour manifesto,” he said.
Mr Johnson is in a showdown with parliament to ensure that no-deal remains a real prospect. Separate research from the United Nations yesterday showed that no-deal would cost the UK “at least $16 billion” in exports.
The letter came as a leading global analytics company warned that a no-deal Brexit raises the risk of doing business in the UK to record levels.
Dun & Bradstreet, the US data company that advises companies on investment decisions, cut its UK “risk rating” to DB3A, the lowest since records began in 1994, from DB2D.
The new rating shifts the UK from a “low risk” to a “medium risk” country, alongside Israel and Ireland, and makes it a less attractive investment than 23 of the 132 countries Dun & Bradstreet monitors, including Germany, France, Slovakia and Taiwan.