May reopens Brexit negotiations creating no-deal concern amongst business community

Theresa May general election

In a chaotic day in Westminster, the Prime Minister pulled the vote planned for Tuesday evening after realising she was in line for a huge defeat at the hands of her own party.

May is set to embark on a tour of European capitals and hold meetings with EU leaders later this week in a bid to get more assurances over the controversial backstop agreement.

Many MPs are opposed to the backstop as it would see the UK unable to leave the EU’s customs union without agreement from Brussels.

Sterling sank to its lowest level against the dollar since April 2017 as May announced the delay, falling by almost two cents to $1.2608.

Speaking in the Commons, May was clear that despite the opposition to the backstop, such a mechanism would have to be part of any deal with the EU.

She instead hoped MPs could be given a greater role in when the backstop is triggered.

May said: “I spoke to a number of EU leaders over the weekend, and in advance of the European council I will go to see my counterparts in other member states and the leadership of the council and the commission.

“I will discuss with them the clear concerns that this House has expressed.

“We are also looking closely at new ways of empowering the House of Commons to ensure that any provision for a backstop has democratic legitimacy and to enable the House to place its own obligations on the government to ensure that the backstop cannot be in place indefinitely.”

In a move likely to pile even more pressure on May, European Commission president Donald Tusk tweeted while the Prime Minister was still speaking in the Commons: “We will not renegotiate the deal, including the backstop, but we are ready to discuss how to facilitate UK ratification. As time is running out, we will also discuss our preparedness for a no-deal scenario.”

Despite Labour leader Jeremy Corbyn accusing the government of being in “complete disarray”, the opposition is not tabling a vote of no confidence in the government.

A Labour spokesperson said: “We will put down a motion of no confidence when we judge it most likely to be successful.”

The day of drama began with environment secretary Michael Gove insisting the vote was still due to be held, despite more than 100 Tories vowing to block the deal.

At just after 11am, the PM’s official spokeswomen said the PM was confident she would be able to win the vote.

But at 11.30am, as May held a conference call with her Cabinet, it was reported the vote was going to be pulled in the face of a large-scale rebellion.

Business leaders reacted with frustration to the delay, with Stephen Martin, director general of the Institute of Directors, saying it added to the “uncertainty” around Brexit.

He added: “While we wish the Government well in their attempts to seek further assurances about the backstop, the clock is ticking and one of the only things we know for certain is that our exit date has been written into UK law for next March.

“The concern among businesses is clear, with two-thirds of our members saying a no-deal Brexit would be negative for their organisation.”

Emma Jones, founder small business support network, Enterprise Nation, said: “The delay is not ideal as just this morning we led a group of 30 businesses to Number 10 to meet the Small Business Minister and the greatest thing they called for was certainty!

“On the other hand, I would say, that if the Prime Minister returns to Brussels to get a deal that MPs can agree – then this is something we should be prepared to wait for – as ultimately it will be a backed deal by March 2019, meaning small businesses can return to focusing on what they do best – running their business.”

Dr Adam Marshall, Director General of the British Chambers of Commerce, said:  “Firms are looking on with utter dismay at the ongoing saga in Westminster, and express concern that politicians are seemingly acting in their own interest, with little regard for the millions of people whose livelihoods depend on the success of UK business and trade. Many business leaders will be intensely frustrated by yet another delay in this drawn-out process, which impacts real-world business conditions, not least currency markets.

“Businesses are clear that time is rapidly running out. With just over 100 days to go until the 29th of March, many are already enacting contingency plans in the absence of clarity from Westminster. Even basic business planning for next year has become difficult, if not impossible, for many firms and their investors.

“Our research shows that in a ‘no deal’ scenario, many businesses would cut investment and recruitment, or move some of their operations elsewhere. Survey after survey have shown that businesses will be taking decisions that are right for them, but may damage the UK economy.

“Businesses need clarity and precision on the UK’s future relationship with the EU and with other key trading partners. Businesses are clear that they do not want a messy and disorderly exit, which both government and far too many firms are underprepared for.

“Avoiding a messy exit from the EU is a matter of national urgency. Efforts must be redoubled to find a route forward, while at the same time ensuring that preparations are stepped up to help businesses and communities deal with any potential scenario.”