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No FTSE for Brexit - big bosses wary of backing government strategy
September 6, 2017 / 3:29 PM / 19 days ago

No FTSE for Brexit - big bosses wary of backing government strategy

FILE PHOTO: Workers are seen in the Canary Wharf financial district in London, Britain, November 11, 2013. REUTERS/Eddie Keogh/File Photo

LONDON (Reuters) - Executives at some of Britain’s biggest companies have voiced their dismay after the government asked them to publicly back its Brexit strategy, exasperating bosses who are grappling with the uncertainties of a move to life outside the European Union.

According to six sources familiar with the situation, Prime Minister Theresa May’s office has asked companies listed on the blue-chip FTSE 100 index to put their name to a public letter welcoming the government’s efforts to make Brexit a success.

The request comes at a time of strain between the government and big business, with companies fearing that the move to leave the world’s largest trading bloc will increase bureaucracy, drive up costs and eat into profitability.

While many remain tight-lipped, companies including the biggest banks and financial institutions have already triggered contingency plans, identifying new locations in Europe to open offices and reallocate staff.

“We have not signed any letters and we are not likely to,” the chief executive of one well-known FTSE 100 corporation said on the condition of anonymity.

Another executive at a FTSE 100 company, who is in regular talks with the government, told Reuters the letter had raised eyebrows.

“We are very reluctant to be dragged into politics at the best of times. Right now we don’t want to endorse a plan that is going to do enormous damage to our industry,” the source said.

Bosses running Britain’s companies have been navigating a difficult terrain since the country voted in June 2016 to leave the EU, with the pound plummeting and some industries already finding it difficult to recruit European workers.

As the March 2019 exit date approaches, many have said they are still waiting for answers about how immigration, trade and regulation will look after Brexit, making it difficult for companies to make long-term investment decisions.

“Business is deep in Brexit planning at the moment but the problem is we don’t currently know if we are heading to continued single market transition, an equivalence regime or mutual market access,” said Iain Anderson, executive chairman of Cicero, a public affairs company that has represented many FTSE 100 firms.

“Until we have clarity on the end goals it is hard for business to sign up to political objectives that are not tied down.”

BRIGHT FUTURE?

May’s Conservatives have traditionally been viewed as more pro-business than the opposition Labour party.

The letter, which May’s advisers wanted to appear in a national newspaper and purport to be from a string of business leaders, states that those signing it are confident that “global Britain has the potential to become one of the most productive economies of the 21st century”.

“We believe this is a good time for employers to work with government and parliament to make a success of Brexit and secure a bright future for our country,” the letter says.

“We welcome the government’s commitment to negotiating an interim period so that firms can ensure they are ready to adapt to the changing relationships and thrive under the new partnership being created with the EU.”

Even though some CEOs are wary of signing the letter in its current form, it could still appear with the backing of some major companies given the importance of having a good relationship with the government.

A spokesman for PM May declined to comment but said there had been lots of engagement with companies over Brexit.

“We have been clear that one of our aims is making sure we deliver a Brexit which is as smooth as possible for business and that gives business the confidence that they need going forward,” the spokesman said.

But underlining the disquiet expressed by many businesses about the Brexit process, a separate source said the Confederation of British Industry, a trade group that represents the biggest companies in Britain, is hoping to publish its own letter next week. The Financial Times reported it would warn that time is running out for the country to get a good deal.

The tactic of asking big business to back government policy is not new, with several letters appearing in the past in the run up to national elections or referendums to lend economic credibility to the government of the day.

One source said the Brexit letter was received last Thursday and that the government had hoped to publish it as soon as this week. A third executive at a FTSE 100 company said they had “no appetite to sign”, while a fourth source at a different company said they were still undecided.

Jonathan Reynolds, City spokesman for the opposition Labour Party, described the government as “desperately trying to canvass support” for its Brexit negotiations.

“It’s telling and alarming that business leaders have so little confidence in this government’s approach that they are reluctant to sign even this lukewarm statement,” he said.

Additional reporting by Andrew MacAskill and Kylie MacLellan; Editing by Catherine Evans

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