Housing and tourism chiefs: no-deal Brexit is a ‘disaster’

Corporate Britain stepped up warnings over Brexit on Tuesday only 24 hours before a critical European summit amid fresh warnings over the economic carnage that could result from a “no-deal”.

The Prime Minister Theresa May heads to Brussels tomorrow without a solution to the thorny Irish border issue which satisfies the EU as well as a warring army of political factions in Westminster, heightening the risk of a cliff-edge Brexit with less than half a year to go until the UK leaves the EU.

But business leaders voiced fears on Tuesday, with housebuilder Bellway warning over the potential effect on sales. The firm said it was “mindful that the forthcoming exit from the EU in March could pose a threat to consumer confidence during the busy spring selling season”. Bellway built 10,000 homes for the first time in the year to July 31 but chief executive Jason Honeyman remained cautious about similar levels of growth in the present year, particularly in the capital.

“I would guess London sales are more sensitive to the exit date than the rest of the country. Our nervousness is around consumer sentiment — some people in London instead of buying in January or February will buy in the summer.”

The boss of London Eye operator Merlin Entertainments also warned May against surrendering to “ridiculous ideology”, with 10% of Merlin’s London staff coming from the EU. “There is a danger that the quotas being talked about will only allow rocket scientists and doctors in,” Nick Varney said. Introducing visas for European tourists would be “disastrous”, he added.

The warnings came as a Reuters poll warned there was a 25% chance of a no-deal Brexit. The Green Budget, published by the Institute for Fiscal Studies, today also predicted a £100 billion hit to growth over the next three years in a cliff-edge scenario. Citi chief economist Christian Schulz, writing for the IFS, said: “We would expect to slash our UK GDP growth forecast by around five percentage points over two to three years in case of a ‘no deal’.” Manufacturers, financial services and transport — accounting for 10 million jobs and a third of the economy — are worse affected.

Even under Schulz’s more optimistic central scenario, under which a deal is struck, he said Brexit “is likely to weigh on growth for the foreseeable future”. “Most scenarios will see less free trade with Europe and lower immigration. This would result in lower growth. The scale of long-term effects will depend on how the UK uses any new freedoms.”