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May looks to business for public support on Brexit plan

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Business will be one of the key allies Theresa May seeks to enlist as she seeks to build support for the draft Brexit deal she has negotiated with the EU.

Put very crudely, big businesses and multinationals supported the Remain cause during the referendum, while most support for Brexit in the world of commerce came largely from the ranks of smaller business and privately and family-owned firms.

Many businesses, particularly in the manufacturing sector, have been vocal since the referendum about the need for any Brexit deal to keep trade as frictionless as possible.

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Accordingly, while most business leaders are understandably reluctant to endorse Mrs May’s deal until they have been through the fine detail, the chances are that many will privately be welcoming the terms negotiated.

One business leader who has been prepared to go public is Jurgen Maier, chief executive of Siemens UK, one of the UK’s largest manufacturing employers.

He told Sky News: “It seems like we have a deal that is possible now, so let’s get behind it – it will be much lower friction [than a no deal Brexit] and as a business we can make it work, so let’s get on with it.”

That will be music to Mrs May’s ears.

A key aspect of the Prime Minister’s Chequers proposals, which would appear to be enshrined in the Brexit deal, was to ensure trade in goods between Britain and the EU remained as frictionless as possible after Britain leaves the EU.

This is something for which many business leaders, particularly manufacturers, had been calling.

So Mrs May and her advisers were disappointed that business leaders were not more supportive, in public, of the Chequers proposals. They regarded it as the most pro-Brexit measure her government has undertaken.

Mrs May has had to work hard to build bridges with business. For her first two years in office, she gave the impression of not liking business much, while relations sank to a new low when in June Boris Johnson, the former Foreign Secretary, was reported as having said “f*** business”.

Things have begun to change in recent months though, particularly since Mrs May appointed the former investment banker William Vereker as her business envoy in July.

Business leaders have enjoyed greater access to the Prime Minister and have been invited to take part in meetings and telephone conference calls with her.

This included a meeting with 150 or so business leaders on Halloween at the Guildhall in the City of London, co-hosted by Philip Hammond, the Chancellor.

Many attendees were struck by the confident tone the pair adopted around Brexit.

This was followed by the creation of five business councils that are intended to meet three times a year, twice with Mrs May and once with a senior cabinet minister, with the aim of providing “high level advice and policy recommendations on the critical issues facing business”.

While manufacturers and exporters have clearly been the main types of business leaders Mrs May has sought to protect in any Brexit deal, it is not the only one, although many players in the services sector – which accounts for three-quarters of GDP – feel they have been neglected.

The City and the wider financial services sector have felt particularly sensitive. Mrs May abandoned early on in the Brexit process any idea of UK firms retaining ‘passporting’ arrangements that allow them to sell their services across the EU without having to go via individual country regulators.

Later, she also appeared to abandon the idea of ‘mutual recognition’, which essentially replicated the passporting arrangements.

The expectation now is that the UK will seek so-called ‘enhanced equivalence’, under which UK and EU regulations would be regarded as equivalent, while the EU’s existing equivalence regime with other countries would be widened to include sectors such as bank lending, which are not currently covered by them.

This may be enough to satisfy some in the City.

Accordingly, having sought closer ties with business leaders in recent months, Mrs May will be hoping many of them provide public backing to her as she seeks to get her Brexit deal over the line.

Meanwhile, in anticipation of the battle Mrs May faces in getting the Commons to vote through her deal, contingency planning continues.

It is already known that a lot of manufacturers are stockpiling goods and parts ahead of possible hold-ups at the borders after March next year.

The majority of these have preferred to keep these activities secret but among those who have said publicly that they are include Airbus, the aircraft maker; Sanofi, the French drug maker; Bentley, the carmaker and Novo Nordisk, the Danish healthcare company and biggest supplier of insulin to Britain.

Tobacco giant Imperial Brands, the maker of Lambert & Butler and Superkings cigarettes, has also started stockpiling inventory, as has Mondelez, the US owner of confectionary maker Cadbury.

Warren East, the chief executive of aircraft engine maker Rolls-Royce, has called stockpiling “costly and inconvenient” but has nonetheless signalled the company is engaging in it.

The latest to discuss stockpiling publicly is Premier Foods, the maker of Oxo, Bisto and Batchelor’s Super Noodles, which has already started ensuring it has adequate provisions of packaging and ingredients and which on Tuesday said it would start stockpiling finished goods if a no deal Brexit began to look likely.

Yet some companies have ruled out stockpiling. Bombardier, the Canadian-owned aircraft and train manufacturer, has ruled out stockpiling parts on the grounds that it would cost it up to £30m to do so.

Others argue that the complexity of their supply chains is such that even stockpiling parts and components would be of little use.

For example, industry gossip suggests that at least one of the major Japanese carmakers has ruled out any stockpiling on the basis that to do so would only partly mitigate the damage that a hard Brexit would do to it.

It – and others – will be desperately hoping that Mrs May succeeds in winning Parliament’s backing, plus sign-off from the EU’s other 27 countries, for her Brexit deal.

(c) Sky News 2018: May looks to business for public support on Brexit plan