London Mayor Khan Warns Leaving EU Single Market Risks Disaster

  • Treasury sticks to forecasts of economic damage from Brexit
  • CBI’s Fairbairn to say business needs migrant workers

Maisonneuve: Hard Brexit Fear May Bring Softer Brexit

London Mayor Sadiq Khan told business leaders that he’ll fight any attempt to take the U.K. out of the European Union’s single market, a move he says could make Britain poorer.

“If we were to leave the single market without an agreement in place for privileged access for British business, the consequences could be disastrous,” Khan told the Confederation of British Industry’s annual London Lunch on Tuesday.

Sadiq Khan.
Sadiq Khan.
Photographer: Simon Dawson/Bloomberg

Khan’s intervention comes after the Times newspaper reported that the Treasury was sticking to its pre-referendum view that leaving the EU will hurt Britain’s economy. It cited an internal report saying that complete departure from the single market would shrink output by as much as 9.5 percent after 15 years, the same numbers it forecast before the June vote in an analysis dismissed by Brexit supporters at the time as propaganda.

London’s mayor, a member of the opposition Labour Party, said that “the clear motivation” for the government to abandon tariff-free access to the single market “would be political expediency, in an attempt to turn an extremely complex argument into a simple one.” Such an approach, he said, “would not only be deeply irresponsible, but could cause significant economic damage.”

Work Permits

He also called for London to be given its own work-permits system, separate from the nationally administered one, to allow the city to continue to attract talent. This is unlikely to be taken up by Prime Minister Theresa May’s government, which has put its focus on immigration restrictions. Home Secretary Amber Rudd last week set out ways to make it harder for people to come to Britain.

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In a speech to the same event, CBI Director General Carolyn Fairbairn urged the government not to clamp down too hard on immigration.

“Many top financial services firms -- in insurance, for example -- come to London because they know they can access the best and brightest from around the world,” Fairbairn said. “Speak to companies in lower-skilled sectors, and many would love to hire more local applicants, but -- right now -- they just can’t get them. Without lower-skilled workers from the EU, Britain would face serious labor shortages, putting key sectors in difficulty.”

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