Fallouts over Britain’s EU divorce settlement worth “tens of billions of euros” could put trade deals worth hundreds of billions at risk if they cause Brexit talks to crash, business leaders warned today.
Speaking at Cambridge University, Confederation of British Industry (CBI) director general Carolyn Fairbairn said negotiators on both sides should concentrate on a mutually beneficial free trade deal as they navigate the UK’s EU exit.
On Saturday the leaders of the remaining 27 EU nations will meet in Brussels to finalise their negotiating position, which includes a demand that Britain agree a financial settlement before trade talks begin.
There is mounting concern within industry that contentions over a expensive divorce bill – estimated by the EU to be around €60bn – could hinder or even derail the negotiations.
“Take a look at the numbers and you see that our long-term trading relationship is the real prize – dwarfing any potential divorce settlement,” Fairbairn said.
“A one-off EU divorce bill of, some suggest, tens of billions of euros, compared with EU-UK trade worth well over €600bn euros every year, the economic case for making rapid progress on a trade agreement is clear.”
She added: “In just two days’ time, Europe’s leaders will be meeting at the EU summit to agree a common response to the article 50 letter. In these discussions it’s vital that the economics cuts through the politics. So our message to European firms and policymakers is ‘keep on talking, keep on listening’.”
During the summit, European leaders are expected to call on Britain to pay “a single financial settlement” that covers previously agreed spending commitments and other liabilities.
In the UK there are worries that Theresa May, under pressure from hard-line Tory MPs and the eurosceptic press, could take an uncompromising position that could potentially bring the negotiations to an end.
The CBI said a no deal scenario would have “chilling effects” for the UK and the EU.
Fairbairn said: “The business community – in the UK and the EU – is united in wanting an agreement with as few barriers as possible. Yet without an agreement, we’d lose together.
“For both sides, leaving the negotiating table without a deal shouldn’t be ‘Plan B’ but ‘Plan Z’. Whether it’s tariffs or regulation, a no deal scenario would have chilling effects on both sides of the Channel.”