Listening to the CBI
The announcement of a snap general election last week met with a mixed reaction from the general public, but there was nothing muddled about the Confederation of British Industry’s response. CBI Director-General Carolyn Fairbairn released a statement the very same day urging both main parties to:
“set out their plans to support economic stability and prosperity over the next Parliament… Distraction from the urgent priorities of seeking the best EU deal and improving UK productivity must be kept to a minimum.”
Nothing very surprising about business wanting a good deal for Britain and a boost in productivity, but the statement’s strong wording is interesting. The reason for the forcefulness is explained a few lines later:
“As EU negotiations now get underway, firms are clear about the serious risks of failing to secure a deal and falling into World Trade Organisation rules. It is vital that negotiators secure some early wins and all parties should commit to working to ensure businesses can continue to trade easily with our EU neighbours, while seeking new opportunities around the world.”
Trade with European Union members currently accounts for around half of the UK’s international commerce and so the CBI is obviously keen to avoid any impairments to UK-EU trade, while also promoting the pursuit of the significant opportunities available elsewhere in the world. While there has been growth in demand for British-made goods over the last few quarters, its dependence on currency effects means that it has apparently done little to relax the CBI.
Tasked only with representing the interests of British businesses, and incorporating 190,000 of them, it appears highly likely that the CBI has given this issue a fair bit of thought. In its most recent Industrial Trends Survey, published quarterly, the CBI revealed that:
“export orders recorded the strongest growth in six years, supported by strong rises in competitiveness, particularly in non-EU markets which improved at a record pace. The weak pound continued to push up costs, with manufacturers reporting the strongest rises in unit costs in six years.”
This comes bundled with a warning that prices are set to rise quickly during Q2 2017. If the decision to call a snap election helps to strengthen the UK’s hand in the coming negotiations (as advertised), and thereby helps the UK to maintain the best of the trade arrangements currently in place then the business community will look upon it favourably. If it fails to achieve this then language of the CBI’s public statements is likely to get significantly more robust in the years to come. Free of the responsibility to play political games, the CBI is in a position to be honest about the future of British trade. We ignore them at our peril.