PM to 'make customs offer to Labour'
May ‘to offer soft Brexit’ amid call to revoke Article 50
Industry is facing a loss of confidence
Theresa May is expected to offer Labour leader Jeremy Corbyn the option of a soft Brexit in what could be a breakthrough in securing an agreement on exiting the EU.
Mrs May is said to have a plan to enshrine in law a customs arrangement with the European Union in a bid to win support for her deal rom the Labour Party.
According to The Sunday Times it would have a “Boris lock” that would make it difficult for a future Eurosceptic prime minister to tear up after she leaves No 10. Tory MPs have been told that they face a “stark choice” — accept a rebranded customs union with Brussels or “lose Brexit”.
The Prime Minister’s offer follows manufacturers calling on her to revoke Article 50 – the legal and political process for leaving the EU – if she fails to reach agreement on a Brexit deal next week.
Companies across industry are becoming increasingly anxious over the looming departure date, with confidence now hitting rock bottom.
In its letter, lobby group Make UK, representing 20,000 manufacturing firms, says it is “critical for the future of UK manufacturing businesses and their workforces that we bring the current uncertainty to an end”.
The letter, seen by The Sunday Times, is from Make UK’s chief executive, Stephen Phipson and comes after two-thirds of the group’s members backed revocation of article 50 if Mrs May does not reach a deal by the new deadline of 12 Aprll.
It was delivered as Chancellor Philip Hammond, pictured, said he is “optimistic” Brexit discussions between the government and Labour can reach “some form of agreement” and said there were “no red lines” in the meetings.
But Mr Corbyn said he was “waiting to see the red lines move” and had not “noticed any great change in the government’s position”. Three days of talks ended on Friday without agreement and Labour said no more talks were planned this weekend.
Ian Blackford MP said: “This warning by UK manufacturers is the latest of many. It is time Theresa May started listening to these legitimate concerns and acted in the interests of the whole of the UK – not just in the interests of her party and career.
“Leaving the EU with her deal or no-deal would be devastating for the UK and its businesses. In Scotland, it could cost up to 100,000 jobs and risk plunging the economy into a recession worse than what we saw in 2008.
“The Prime Minister must heed this warning and seek a longer extension to Article 50 to enable a second referendum on EU membership to be held, and keep the option to revoke Article 50 to avoid a no-deal outcome.”
Industry’s concerns have been exposed in a series of warnings and surveys showing increased tension over the prolonged Brexit uncertainty, including the latest productivity figures from the Office for National Statistics which showed output per hour worked rose just 0.3% quarter-on-quarter in the fourth quarter of 2018.
Howard Archer, chief economic advisor to the EY ITEM Club, said: “Heightened concern over Brexit has clearly caused some companies to limit their investment with damaging implications for productivity.
“Business investment fell for a fourth successive quarter in the fourth quarter of 2018 and at an increased rate of 0.9% quarter-on-quarter and 2.5% year-on-year.
“If a Brexit transition deal is agreed and enacted during the second quarter, this should ease business uncertainty and provide some boost to business investment which would be good news for productivity prospects. Even so, ongoing uncertainties over the future trade relationship between the UK and EU may well still limit the upside for business investment.
“A prolonged Brexit delay would be likely to extend business uncertainty and continue to weigh down on investment, which would not be helpful for productivity prospects.
“If the UK leaves the EU without a “deal” business investment is likely to suffer significantly, with worrying implications for productivity.”