Industry fears hard Brexit is closer; markets believe soft exit is possible

Fears that a catastrophic no deal Brexit is closer following the vote in the British Parliament yesterday. Photo Shutterstock

Logistics and transport industry figures have reacted with alarm following the British Government’s significant defeat in the House of Commons yesterday, fearing that the result brings a disastrous “no deal Brexit” closer, but a bounce in the value of the pound shows the markets are more optimistic.

Prime Minister Theresa May’s Brexit deal was voted down by a massive 230 votes, with one-third of the Conservative Party’s Members of Parliament voting against their own Government’s flagship policy.

In Brussels, the European Union’s chief negotiator, Michel Barnier, told the European Parliament that he “regretted” the result of the vote, but that it was Britain’s problem and that British politicians must find a solution.

However, Brussels-based Pauline Bastidon, the head of European policy and Brexit for the Freight Transport Association, told FreightWaves that, “Yesterday’s vote increases the risk of no deal and we are telling all our members to accelerate their no deal preparations.”

Bastidon said that no deal will lead to restrictions on trade and the movement of goods and “must be avoided. No deal is simply not an option, we would want to see that taken off the table.” She went on to say, “Our members need frictionless trade, but it is up to the politicians how they deliver that, but that is what we need.”

Those sentiments were supported by the Confederation of British Industry’s director-general Carolyn Fairbairn, who said, “Every business will feel ‘no deal’ is hurtling closer. A new plan is needed immediately. This is now a time for our politicians to make history as leaders. All MPs need to reflect on the need for compromise and to act at speed to protect the UK’s economy.”

Similarly, the Road Haulage Association (RHA) “implored” the Government and Parliament to quickly find an agreement that will keep the UK supply chain moving.”

RHA chief executive Richard Burnett said, “It is imperative that any withdrawal deal includes a transition period to establish new and efficient border technology. Systems across industry needed to be put in place to avoid disastrous queues at ports and also a hard border between Northern Ireland and the Irish Republic.”

He added that “a deal would avoid reliance on an acute shortage of permits [for truck drivers] and measures for customs that are unworkable and impractical.”

Meanwhile, the BBC reports that the markets have been subdued following the Brexit vote and ahead of the vote of confidence in the government that is due to take place today. The Financial Times Stock Exchange (FTSE) 100 was down 32 points, less than 0.5 percent, but the FTSE 250 was up by 0.3 percent.

The pound dropped substantially on the Brexit vote; it regained the losses when the opposition called for a vote of no confidence, which Theresa May is expected to win. As such, the BBC reported the markets believe that nothing much has changed and one banking expert said there appears to be no appetite on any side of Parliament for no-deal.