British businesses do not want another referendum on Brexit and have no appetite for re-entering a customs union with the EU, the leader of the UK’s largest business lobby group has warned.
Despite growing clamour on the left of British politics for the UK to rejoin the EU, CBI director-general Rain Newton-Smith told the FT that 10 years after the 2016 vote the business community did not want to go back — despite acknowledging the economic pain caused by leaving the world’s largest trading bloc.
“The evidence is compelling and indisputable that Brexit has created costs for business,” she said, but “businesses aren’t looking to relitigate the referendum. None of the business leaders I speak to want to reopen that debate.”
Newton-Smith’s intervention puts clear distance between the business world and political leaders in Labour, Liberal Democrats and Greens calling for a deeper rapprochement with Brussels than currently being offered by Sir Keir Starmer’s limited ‘reset’.
Andy Burnham, the most likely candidate to succeed Starmer as Labour Party leader, has indicated he would want to rejoin the EU at a future date.
Liberal Democrat leader Ed Davey made a speech last week demanding Burnham move closer to Europe if he became prime minister, including rejoining the single market and a customs union.
However Newton-Smith said the business world had moved on, especially after the UK signed trade deals with the likes of India and the oil-rich Gulf states.
“Five years ago, businesses would have supported joining the customs union. But the reality is the world has changed. So, no, CBI members aren’t asking to join the customs union,” she said.
Starmer, who has announced he will step down as prime minister, has set “red lines” ruling out joining a customs union, returning to the EU single market or accepting the free movement of people, severely limiting the economic value of its ‘reset’ with Europe.
The deal will boost UK GDP by just 0.3 per cent over 15 years, according to government estimates — just a fraction of the 8 per cent hit to GDP that chancellor Rachel Reeves warned last March could have been caused by Brexit.
However, a summit planned for July 11, where the arrangement was due to be cemented, has been postponed pending the outcome of a power transition prompted by Starmer’s resignation on Monday.
With its red lines in place, the Starmer government had concentrated on the potential value of closer regulatory alignment with Brussels in key industrial sectors, but Newton-Smith warned that such a strategy was not without risks.
Asked about the potential benefits of rejoining the EU single market, Newton-Smith said business needed to be closely consulted on the pros and cons of readopting Brussels regulation.
“The single market is the obvious route to alignment, but alignment isn’t a silver bullet. It only makes sense where it’s clearly in the UK’s economic interest and the benefits outweigh the trade-offs,” she said.
The Chemical Industries Association has warned that unilateral realignment with EU chemicals regulations would not necessarily deliver improved market access — despite Reeves citing chemicals as a key future opportunity for her alignment strategy.
However, Newton-Smith acknowledged that Britain outside the EU was at risk of being shut out of continental value chains by Brussels increasingly moving towards protectionist ‘buy European’ policies such as the Industrial Accelerator Act, and called on both sides to avoid this.
“With the UK increasingly caught in the middle of American and Chinese industrial firepower, this is the very definition of a ‘lose-lose’ outcome. We can’t let politics get in the way of our mutual competitiveness,” she said.
The Department for Business and Trade said it was working with Brussels to find solutions to the problem. “Ministers are meeting regularly with EU leaders to discuss Made in Europe and are committed to protecting vital UK-EU trade and supply chains,” it added.
Additional reporting by Ashley Armstrong
