Non-alignment with EU post Brexit prompts concern of price rises

21st January 2020

The chancellor, Sajid Javid, has said Treasury will not lend support to manufacturers that favour EU rules after Brexit.

Businesses have predicted price rises after the chancellor said there would be no alignment with EU regulations once Britain’s exit from the European Union was made official.


Javid claimed, in a Financial Times interview, that the Treasury would not lend support to manufacturers that favour EU rules as the sector has had three years to prepare for Britain’s transition. He stated: “There will not be alignment, we will not be a rule taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year”.

His comments will alarm business leaders in key sectors such as farming and manufacturing who will fear more complex import and export trade barriers. This is a marked departure from Theresa May’s proposed deal, in which she outlined close alignment with the EU in order to minimise border friction for traders.

The Confederation of British Industry (CBI) group’s director general, Carolyn Fairbairn, said business “recognises there are areas where the UK can benefit from its future right to diverge from EU regulation” but also urged the government “not to treat this right as an obligation to diverge. For some firms, divergence brings value, but for many others, alignment supports jobs and competitiveness – particularly in some of the most deprived regions of the UK.”

The shadow chancellor, John McDonnell commented: “Fears now made real about food price increases and threats to jobs in motor industry and manufacturing. Right ideology overriding common sense.” Whilst Labour MP David Lammy described it as a “disaster for business”. “Brexit will hurt most those communities it claimed to help,” he said.

Michel Barnier, the EU’s chief negotiator has also warned that the UK will not get a tariff-free, quota-free trade deal with the EU unless it accepts level-playing field rules on issues such as the environment.

Javid has conceded some businesses may not benefit from Brexit, but stated the UK economy would continue to thrive in the long term “Once we’ve got this agreement in place with our European friends, we will continue to be one of the most successful economies on Earth,” he said.

Negotiations begin formally after 25 February when the EU has formally agreed its negotiating goals but, in the meantime, Javid will have an opportunity to sell his Post Brexit vision for the UK during the World Economic Forum, which runs from 21-24 January.

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