John Longworth, the former director-general of the British Chambers of Commerce (BCC), urged Theresa May to reveal she is “minded” to quit the EU’s Single Market and Customs Union ahead of exit talks with Brussels.
Under pressure from pro-EU Tory MPs, the Government has now committed to publishing its Brexit plans prior to triggering Article 50 of the Lisbon Treaty, the legal mechanism for quitting the EU, by the end of March next year.
Mr Longworth this morning told MPs he disagreed the Government should be setting out its full plan at the risk of harming their Brexit negotiations, but he suggested Mrs May “ought to declare a direction of travel so that businesses can prepare and plan for Brexit day”.
Speaking to the House of Commons’ Brexit Select Committee, he said: “It’s important that the Prime Minister declare that the Government is minded to leave the internal market and the customs union so that businesses can plan for that.
“That will also substantially strengthen the Government’s negotiating position because it will become apparent very quickly to the EU that they don’t really hold all the cards.”
Quitting the Single Market and Customs Union would release Britain from continuing EU budget contributions, end the power of EU judges to rule on British laws, cease freedom of movement and allow the UK to set up its own trade deals with non-EU countries.
Such a scenario has been dubbed a ‘hard’ Brexit by pro-Remain politicians eager to see Britain retain close links with Brussels.
The EU’s chief Brexit negotiator Michel Barnier yesterday delivered a hard-nosed warning that remaining part of the Single Market would force Britain to remain signed-up to the bloc’s four freedoms, including freedom of movement, which Mrs May has vowed to end.
Mr Longworth insisted the Government must also begin “crystallising the good things that will come from leaving the EU” such as the ability to scrap Brussels regulation.
Citing research that suggests removing EU laws could boost the UK economy by up to 1.2 per cent of GDP, Mr Longworth told MPs: “Deregulation in itself will be equivalent to a tax cut on business.”
The former Asda and Tesco director also called on the Prime Minister to include “signature-ready trade deals on Brexit day plus one” in her strategy for leaving the EU.
Mr Longworth admitted it would be politically “difficult” for the Government to scrap all external tariffs, currently enforced through the UK’s membership of the EU, after Brexit.
But he said: “The Government’s direction of travel should be free trade, it should be a tariff-free UK.
“Some industries will require support in that regime, but the costs of support will be minor by comparison with the huge benefit of the removal of tariffs.
“And of course those industries that require support will be those that are strategically important for the security of the nation.
“We have to clothe and feed people, we have to be able to build armaments and so on.”
He also outlined how ending Britain’s multi-billion pound annual contributions to the Brussels budget “will benefit the UK economy by half a per cent of GDP”.
Carolyn Fairbairn, director-general of the Confederation of British Industry, who campaigned for Remain during the EU referendum, had told the Committee her members had “serious concerns” about Britain quitting the Customs Union.
She said: “There are pros and there are cons and we have not yet taken a view. The pros are the ability to conduct our own trade negotiations.
“However, there are serious concerns about the red tape, the bureaucracy, the return of customs barriers and rules of origin reporting.”
But Mr Longworth dismissed fears over increased paperwork or obstacles to trade for British companies outside the Customs Union.
He insisted trading standards and regulations are “becoming global not simply concerning individual nations or blocs of nations” while an existing 1922 treaty already “enables the free movement of goods in customs terms around the world” without the involvement of the EU.
Prior to the EU referendum, Mr Longworth was dramatically suspended as director-general of the BCC after he used their annual conference to describe how Britain could have a “brighter” future outside the EU.
Ex-prime minister David Cameron was forced to deny Downing Street staff had pressured the BCC into their action against Mr Longworth.
7th December, 2016: Express