Theresa May has challenged British business leaders to step up funding for research and investment to prepare the UK economy for the post-Brexit future. The British Prime Minister said UK businesses were falling short of rivals in the United States and Germany in pumping money into developing new technology.
In a speech at the CBI’s annual conference she sought to reassure business leaders nervous about the British Government’s approach to Brexit that progress was being made on securing a trade deal with an implementation period after the UK leaves the European Union in March 2019.
Mrs May’s address was preceded by CBI president Paul Drechsler who used his speech to criticise Cabinet disunity and the “soap opera” nature of the Brexit process. Calling for businesses to do more to fund research she said: “Today, for every £1 in Government support for R&D, British businesses invest £1.70.
“But in America, businesses invest around £2.70 and German businesses invest nearly £2.40.
“So I want you to work with us to drive up business investment.” Before the publication of the Government’s industrial strategy and Chancellor Philip Hammond’s Budget later this month, Mrs May stressed her desire to tackle problems in the housing market.
“We will build the homes our country needs so everyone can afford a place to call their own and all the security that brings,” she said. Mrs May used the speech to the CBI to insist that after a decade of recovering from the financial crash, the next 10 years will be about “a new chapter in the story of the British economy”.
The Prime Minister defended her approach to the Government playing a role with its industrial strategy, but insisted there would be no return to 1970s interventionism. “As we look ahead to the next 10 years for Britain’s economy, we should do so as rational optimists. There are huge opportunities ahead. Making the most of them will demand hard work, imagination, and commitment,” she said.
“We cannot, and will not, try to make a plan for every corner of our economy. We believe in the free market and won’t attempt to shield the economy from market forces. “So we will have to make strategic decisions about where the Government can, and where it cannot, best support key sectors of our economy.
“Such an approach avoids the failed state interventionism of the 1970s. “But it also learns from the past failures of governments to give sectors and places across the country the long-term support they need to cope with economic change and compete in a changing global market place.”
On Brexit, the CBI has warned that 60% of firms will have begun implementing contingency plans for a no deal scenario by the end of March 2018 – putting pressure on Mrs May to secure urgent progress to avoid jobs being lost overseas.
Uncertainty over Brexit has also been given as a reason why some firms have been reluctant to invest in the UK. The Prime Minister said: “I have been determined to give business and industry as much certainty as possible.
“Achieving that maximum certainty was the first objective I set in my Lancaster House speech in January and it has remained fundamental to the Government’s negotiations to date. “We want to forge an ambitious economic partnership, out of the Single Market but with a new balance of rights and responsibilities between us and the European Union.
“One which respects the freedoms and principles of the EU, and the wishes of the British people. “We should be excited by the possibilities which this new relationship presents for the future, just as we are realistic in acknowledging that it will take time to finalise.
“I have made clear that a strictly time-limited implementation period will be crucial to our future success. “I know how important it is for business and industry not to face a cliff-edge and to have the time it needs to plan and prepare for the new arrangements.
“During this period our access to one another’s markets should continue on current terms, and I want us to agree the detailed arrangements for this period as early as possible. “But we should also be able to develop our relationships with countries outside the EU in new ways, including through our own trade negotiations.”
CBI director general Carolyn Fairbairn said: “The Prime Minister gave her wholehearted backing to a modern industrial strategy that backs dynamic, responsible business rather than heavy handed intervention. “Four out of five firms are clear that industrial strategy is the fundamental building block of a fair UK economy with great jobs and rising living standards.
“With the pace of change of technology accelerating, business and Government must move quickly, together, to transform innovation, skills and infrastructure to boost all sectors and regions. “The CBI has been clear this must be delivered in the partnership of the century between firms and the Government, with a pro- enterprise environment that unlocks more investment.
“The Prime Minister’s commitment to this is welcome.” She added that a “status quo” Brexit transitional deal was “essential for firms across the country, providing much needed stability and avoiding a catastrophic cliff-edge scenario”.
In a pointed message to Mrs May’s Cabinet, she said: “All in the Government must embrace this: the road to a Florence Deal must be swift and have no deviations.”