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Blind Brexit? Businesses fear even more uncertainty

Business is worried enough about Britain crashing out of the European Union. Now it has a new nightmare: a b...

Posted: Sep 20, 2018 5:30 PM
Updated: Sep 20, 2018 5:30 PM

Business is worried enough about Britain crashing out of the European Union. Now it has a new nightmare: a blind Brexit that could extend the uncertainty over trade for years.

Fears are rising that the United Kingdom may leave the European Union in March 2019 with a deal so vague that it gives companies and investors no greater clarity on the future than they had in June 2016 when voters backed Brexit in a referendum.

The political pressure increased Thursday when the only firm proposal for Brexit was panned by a key EU leader and French President Emmanuel Macron described people who said leaving the bloc would be easy as "liars."

"The prospect of a vague Brexit, with only a slimline political declaration about the future EU-UK relationship published alongside a legally-binding withdrawal agreement, is gaining ground," said Mujtaba Rahman of the political risk consultancy Eurasia Group.

A blind Brexit may be even worse for some companies than a scenario where the United Kingdom leaves in March without an agreement on preferential access to Europe's vast markets. That would deliver a major shock but executives would at least know what they're dealing with.

Stephen Phipson, CEO of the manufacturing trade group EEF, said further years of uncertainty would be most painful for large foreign manufacturers with complicated supply chains that crisscross borders.

Investments on hold

Global companies such as Airbus, Siemens, BMW, and Nissan are in the firing line.

"An automotive manufacturer that has three plants here and one in Eastern Europe, he's going to put his investment over there," said Phipson. "Boards won't release capital to invest because they're not sure of the environment."

Many companies have put investments on hold following the vote for Brexit because they don't know whether they'll face new regulations, tariffs or customs checks at borders. It's also unclear if they'll be able to move staff between the European Union and the United Kingdom, or be forced to pay new taxes.

BMW said Tuesday that it would shut its Mini factory in England for one month of maintenance immediately after Brexit because it can't be sure of getting the parts it needs. Jaguar cited uncertainty over Brexit as one reason for putting 1,000 workers on a three-day work week until Christmas.

Some executives have pinned their hopes on a proposal developed by British Prime Minister Theresa May that would maintain close trading ties in goods and agricultural products and include a transition period of nearly two years.

But the European Union's top political leader Donald Tusk took a hard line on the plan — known as Chequers — after a meeting of EU leaders in Salzburg on Thursday, saying the proposal would not work because it risks undermining the bloc's single market in goods and services.

'Very unappealing'

May insisted that her plan is the only way forward. Still, she could be forced back to the drawing board by pressure from the European Union, her own party or the opposition.

But even a blind Brexit would have opponents, including some that argue Britain would be giving up its negotiating ace: money it owes to the European Union.

"Hardliners will fight back by saying that the UK is throwing away its best card — the £39 billion divorce payment to the EU — for vague warm words about the future relationship and so would have little or no leverage during the talks on it during the transitional phase," said Rahman.

Asked about a scenario where a blind Brexit was followed by Britain eventually crashing out the bloc without a final deal on trade, Phipson was unequivocal.

"That sounds very unappealing," he said.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 333626

Reported Deaths: 3843
CountyCasesDeaths
Hennepin700691145
Ramsey29459521
Dakota23564198
Anoka23541236
Washington14864125
Stearns14564125
St. Louis9549121
Scott896460
Wright847548
Olmsted714637
Sherburne618746
Clay529960
Carver509715
Kandiyohi440828
Rice432338
Blue Earth431217
Crow Wing383339
Otter Tail338925
Chisago334516
Benton322753
Nobles316032
Winona297832
Douglas283040
Mower274823
Polk271527
Morrison246731
McLeod233721
Lyon232812
Beltrami230718
Goodhue222932
Becker221521
Steele21038
Itasca206324
Isanti203917
Carlton201417
Todd190314
Nicollet172126
Mille Lacs164632
Freeborn16227
Le Sueur157012
Brown156115
Cass153511
Pine14498
Meeker144812
Waseca143411
Roseau13035
Martin124721
Hubbard119729
Wabasha11301
Redwood104620
Chippewa9808
Renville95530
Cottonwood9454
Dodge9311
Watonwan8944
Wadena8637
Sibley8404
Rock8249
Houston8004
Aitkin79930
Fillmore7690
Pipestone76518
Pennington7058
Yellow Medicine69612
Kanabec68614
Swift63610
Murray6124
Faribault6093
Pope5721
Clearwater55410
Marshall5459
Stevens5403
Jackson5321
Lake4518
Koochiching4216
Wilkin4175
Lac qui Parle4124
Lincoln3811
Unassigned38159
Norman3718
Big Stone3392
Mahnomen3225
Grant2986
Kittson2518
Red Lake2303
Traverse1531
Lake of the Woods1071
Cook800

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 237371

Reported Deaths: 2571
CountyCasesDeaths
Polk34873347
Linn14787169
Scott1184692
Black Hawk11288147
Woodbury10763137
Johnson985939
Dubuque947999
Story701924
Pottawattamie682474
Dallas661260
Sioux383829
Webster378339
Cerro Gordo373252
Marshall360950
Clinton345645
Buena Vista316614
Muscatine305172
Des Moines300623
Warren294115
Plymouth287044
Wapello265072
Jones237118
Jasper231546
Lee228719
Marion211922
Carroll204325
Bremer202713
Henry19367
Crawford183116
Benton175423
Tama157442
Jackson151117
Washington150216
Delaware147621
Dickinson145812
Boone144912
Mahaska133928
Wright13107
Clay12505
Buchanan123410
Hardin122812
Hamilton119514
Page11925
Kossuth11768
Clayton115510
Cedar114614
Harrison113432
Floyd111921
Mills11129
Calhoun10987
Fayette109812
Lyon10769
Butler10748
Winneshiek105513
Poweshiek103714
Iowa101414
Cherokee9674
Winnebago96325
Chickasaw9195
Hancock9138
Sac9068
Louisa90122
Grundy89514
Allamakee88413
Cass84725
Union8437
Mitchell8429
Appanoose81613
Humboldt8125
Shelby80511
Emmet79026
Guthrie78315
Franklin76421
Jefferson7635
Madison7265
Unassigned7090
Palo Alto6744
Keokuk6567
Pocahontas6024
Howard5859
Ida54915
Osceola5461
Greene5422
Montgomery51411
Clarke5064
Davis4839
Taylor4833
Monona4567
Adair4539
Monroe45113
Worth3881
Fremont3823
Van Buren3815
Decatur3410
Lucas3416
Audubon3112
Wayne3087
Ringgold2432
Adams1812
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