Liam Fox said continued membership of an EU customs union would be a complete sellout ©PA Images
Liam Fox said continued membership of an EU customs union would be a complete sellout ©PA Images

Business 'phenomenally frustrated' by Brexit politics

27 February 2018

Procurement and supply chain professionals should be concerned about the path towards Brexit the UK government is taking, a professor of business has said.

Speaking to SM, Nigel Driffield, professor of international business at Warwick Business School, said a seamless border between the UK and Europe would be impossible without continued membership of the customs union.

His comments come after Labour leader Jeremy Corbyn called for continued membership of an EU customs union and international trade secretary Liam Fox decried this idea as a “complete sellout”.

Driffield said: “Even with all the electronic tagging that we can do, I don’t see how, if we are outside the customs union and outside of the single market, all of the firms in the UK whether they are UK-based or foreign firms who have supply chains that come into or out of Europe – I do not see how that is going to work seamlessly once we have some form of border control.” 

Yesterday Corbyn called for UK to remain part of the customs union, and said a Labour government would aim to negotiate a deal where the UK needed a “bespoke” deal that would allow it to choose what EU regulations it ascribed to. The Conservative Party called the speech a “cynical attempt… to frustrate the process of Brexit”, and Fox today reaffirmed the government’s position of leaving both the customs union and the single market.

Driffield, however, said Corbyn’s position was closest to the preferred outcome outlined by the CBI’s director general Carolyn Fairbairn. “The only way to protect the 40 years of integration of trade and inward investment into the UK, and supply chains passing into and out of the EU several times within one value chain – the only way to protect that is to stay in the customs union,” said Driffield.

He added that Labour’s new position did feel a bit “cake and eat it”, and warned any potential membership of a customs union was unlikely to be bespoke. “This is where we get into politics on both sides, what [Corbyn] is trying to say is it’ll be something else, we’re going to get something bespoke. Well, we’re probably not. What we will do is we will join the customs union that already exists, that we’re already part of.” 

Many businesses in the UK are already putting into action contingency plans based on a worse case outcome, said Driffield, evident not in businesses leaving but by a lack of new businesses coming in.

Business is “phenomenally frustrated with the lack of attention to detail by politicians on both sides”, he added. “Politicians on both sides are still just saying, ‘Yes, of course we’ll solve that’ [but] trade negotiations are about detail, and it doesn’t matter whether you’re talking about trade in intermediate goods, trade in final goods or whatever.

“Whatever issues are put in front of businesses in the UK, businesses will solve them because that’s what businesses do. The issue then becomes, are they going to solve it by moving lots of activities to Europe or elsewhere, and I rather fear that may well be the solution.”

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