LONDON (Reuters) – British companies have started to launch contingency plans to keep their businesses in business if Britain left the European Union without an agreement, underlining the growing concern that political disputes in London could hinder a agreement with Brussels.
PHOTO PHOTO: British Prime Minister Theresa May speaks at the annual conference of the British Industry Confederation (CBI) in London, Great Britain, November 19, 2018. REUTERS / Toby Melville
With less than five months before Britain comes out of the EU, Prime Minister Theresa May has won the support of many companies on Monday for a divorce agreement project while pursuing a "charm offensive" to bring the Gran Brittany, deeply divided on Brexit, on board.
The Bank of England also offered its support, saying that the draft withdrawal agreement would help to safeguard the economy and announce that it would broadcast on November 28 the publication of bank stress tests to analyze how to deal with a Brexit "without agreement".
This possibility has increased with opposition to the May affair joining an unlikely group of hard-working Brexit activists in the conservative party, Northern Irish May allies in parliament and EU supporters.
Without an obvious majority in parliament, May risks losing the vote on her draft contract, most likely next month. Such a defeat could open the possibility that Britain goes away without an agreement, or even that Brexit is postponed or does not happen at all.
The Northern Union Democratic Union Party, which supports the May minority government, showed its hand last Monday when it did not vote with the government on the financial account.
Brexit spokesperson Sammy Wilson described this as "a political message".
"We had to do something to show our displeasure," he said.
Wilson later told Sky News that his party would vote against the May agreement if it came to parliament, but in the meantime the DUP legislators would have pushed the government to change Brexit strategy, the biggest change in politics British for almost half a century.
The prime minister may have hoped that the opposition to what is a divorce project with the EU would vanish after an attempt to overthrow it by the Brexit activists in his party seemed to have vanished.
It could still hope that some in the Labor Party's main opposition will support its draft agreement.
But even on Monday those who want her to maintain ties with the EU both in her conservatives and in the Labor Party have forced her government to another embarrassing situation by promising to publish an economic impact assessment that compares the his agreement with remaining in the block.
May warned the legislators that they have a simple choice: cope with his agreement or risk inaugurating a departure without delay or delay to Brexit.
But few of his critics are accepting those terms.
Doubts about voting in Parliament have prompted companies to start making plans for a "non-agreement" Brexit, which some have described as the worst-case scenario that offers no confidence in supply lines and commercial conditions.
Electrocomponents (ECM.L), which holds more than half a million industrial and electronic products, said it would spend £ 30 million ($ 39 million) to increase its participation in fast lines in Britain and Europe. AO World (AO.L), a group of electric products and home appliances online, said it could increase inventories to mitigate any friction in the supply chain, while Compass (CPG.L), the world's largest catering company, said it was looking to build inventory and change its menu before Brexit next March.
However, the Governor of the Bank of England, Mark Carney, told a parliamentary committee that most companies have no contingency plans.
The BoE said it would comply with a request from the Parliament's Treasury Committee to provide an analysis of how the draft Brexit divorce agreement "will affect the Bank's ability to provide its legal expertise for monetary and financial stability , even in a "no transaction, no transition" scenario.
More than two years after the British citizens voted 52-48% to leave the EU, it is still unclear how, under what conditions or even if it will go as planned on March 29, 2019.
The EU should hold a summit to discuss the draft agreement on 25 November. Some eurosceptic ministers in the May cabinet want her to rewrite parts of it, even if the governments of the EU have largely decided it.
Secretary of Justice David Gauke said the talks are now shifting towards Britain's future relations with the EU.
"The withdrawal agreement is basically over." We had thousands of hours of negotiations with the European Commission and we reached an agreement in which there were compromises on both sides, "he told BBC radio.
"The withdrawal agreement meets our key objectives in terms of the integrity of the United Kingdom, which is so important for all of us in the government, especially the prime minister."
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Written by Guy Faulconbridge and Elizabeth Piper; Additional report by Helen Reid in London; editing by David Stamp