MPs attack government over lack of post-Brexit investment policy

MPs have strongly criticised the government for failing to prepare a policy on international investment agreements ready for Brexit, which the new administration has pledged will happen “come what may” on 31 October.

The International Trade Committee (ITC) said it was “alarmed” that ministers have not set out “even basic lines of policy” on issues such as the degree of regulation there should be on investment from firms that might pose a security risk.

Britain will have to negotiate all of its trade and investment agreements for itself once it leaves the European Union. International investment agreements are treaties that set out the rights of investors and responsibilities of governments.

They have been highly controversial in recent years due to rules on protecting and liberalising investment. For example, the US-EU TTIP deal, which has been put on hold, drew fire for proposing that companies could sue governments for lost profits.

The ITC, which scrutinises the Department for International Trade (DIT), said in a report today that the UK must work out its position on foreign investment “so it is ready to strike deals in the event of a no-deal Brexit”.

A spokesperson for investment managers body the Investment Association said: “The report makes important recommendations on investment protections and we know that it is an issue the government are looking at closely.”

DIT has said it cannot establish a policy on international investment until it has left the EU due to the bloc’s rules. But the report said there is “no credible legal basis for this argument”.

A DIT spokesperson said: “The UK is an incredibly attractive destination for foreign direct investment, as shown by a range of analysis by independent experts.

“As the Prime Minister has said, we are ready for no deal. We are building on the 90 bilateral investment agreements we have already secured with countries across the world.”

The report also argued for a degree of regulation concerning inward investment that risks economic harm or damage to national security, as is alleged by some in the case of Huawei’s potential involvement in the UK’s 5G network.

The Committee’s report says it is important to “balance promotion of inward investment with safeguarding national security”. It recommends the government sets out an “investment screening regime” and picks a minister who will take “the ultimate decision on whether to block an investment”.

CBI says that UK is not ready for a no-deal Brexit in October

The Confederation of British Industry (CBI) has warned the government that neither the UK nor the EU is ready for a no-deal Brexit on 31 October.

“While the UK’s preparations to date are welcome, the unprecedented nature of Brexit means some aspects cannot be mitigated,” said the CBI.

It has published practical steps it says the UK, EU and firms can take.

A government spokesman said the UK has increased the pace of planning for no-deal.

The CBI had previously said leaving the EU with a deal was essential to protect the economy and jobs.

New prime minister Boris Johnson has made Michael Gove responsible for planning a no-deal Brexit.

Mr Gove has said the UK government is currently “working on the assumption” of a no-deal Brexit.

He said his team still aimed to come to an agreement with Brussels but, writing in the Sunday Times, he added: “No deal is now a very real prospect.”

‘Hampered’

The CBI’s report What Comes Next? The Business Analysis Of No Deal Preparations advises what measures businesses can take to reduce the worst effects.

The advice is based on a study of existing plans laid out by the UK government, European Commission, member states and firms.

“And although businesses have already spent billions on contingency planning for no deal, they remain hampered by unclear advice, timelines, cost and complexity,” the CBI says.

“Larger companies, particularly those in regulated areas such as financial services, have well-thought-through contingency plans in place, though smaller firms are less well prepared.”

The report is based on thousands of interviews with firms of all sizes and sectors, including 50 trade associations, covering all areas of the UK economy.

The CBI says that in a no-deal Brexit some 24 of 27 areas of the UK economy would experience disruption.

The UK had been due to leave the EU on 29 March, but former Prime Minister Theresa May asked for an extension and the date was pushed back to 31 October.

A UK Government spokesperson said: “This is a constructive contribution from the CBI, acknowledging the importance of all businesses preparing for no deal on the 31 October.

“While we have done more to prepare than this report implies, since the new Prime Minister was appointed the Government has stepped up the pace of planning for no deal. The Chancellor has confirmed all necessary funding will be made available for vital no deal preparations. This includes funding for a major nationwide communications campaign to ensure that people and businesses are ready.

“Crucially, while there is more to do, the CBI observes that the UK is ahead of the EU in planning for no deal.”