British companies have expressed concerns that Boris Johnson’s Brexit deal could leave industry worse off than under the previous agreement with the EU.
Businesses, investors and economists have been almost unanimously in favour of the UK securing a withdrawal deal with the EU to avoid a no-deal Brexit, and markets appeared to welcome a diminished risk of a chaotic break on 31 October, after the UK and the EU unveiled a revised deal on Thursday.
Sterling initially surged on news of the agreement to a five-month high of $1.2988 against the US dollar. However, in volatile trade, the currency later gave up all its gains, falling as low as $1.2756 after the Democratic Unionist party said it would not back the deal. The FTSE 100 rose by 0.52% to 7,182 points.
The vast majority of the 141 clauses contained in the revised political declaration published by the UK and the EU are identical to what was agreed by Theresa May.
But the line in the declaration that “the United Kingdom will consider aligning with union rules in relevant areas” in any future trade talks has been ditched, as well as a clause promising a relationship “as close as possible” to the current arrangements.
An industry source said the changes meant the new agreement was “either the same or worse than the March deal” for goods exporters on every issue.
Multiple sources in industry groups and major companies said the new deal gave greater scope for regulatory divergence that would make it more difficult for British companies to sell to their biggest export market.
The revised declaration also abandoned a commitment to avoid rules of origin checks, potentially adding significant barriers to trade, which could affect industries reliant on frictionless imports, such as the automotive sector.
A spokeswoman for Jaguar Land Rover, the UK’s largest carmaker, said the company “needs a deal that protects tariff-free and frictionless trade and guarantees a level playing field on critical areas of regulation and immigration”.
Carolyn Fairbairn, the director general of the Confederation of British Industry, said “business has serious concerns about the direction of the future UK-EU relationship” and the deal remained “inadequate” on services.
“Decades of free and frictionless trade with the UK’s largest market, forged by thousands of firms big and small, must not be abandoned,” she said.
May gave business groups explicit verbal assurances that her government would seek to continue regulatory cooperation with the EU after Brexit. The present government has so far not given any similar assurances and the indications have been that it would seek a deregulatory agenda, according to a separate source involved in discussions between business and ministers.
The Department for Business, Energy and Industrial Strategy was approached for comment.
