Theresa May warned by Europe's biggest businesses that time is 'running out' over Brexit

Theresa May has been warned by some of Europe's biggest businesses that "time is running out" and that a free trade deal after Brexit must be as "frictionless as with a customs union".

By Steven Swinford, Deputy Political Editor 

1 hour ago

The Prime Minister met the European Round Table of Industrialists in Downing Street for discussions about future customs arrangements with the EU.

The business leaders, who included the chairman of Volvo, BP, Nestle and BMW, said that they need "clarify and certainty", adding that "uncertainty causes less investment".

Mrs May has ruled out keeping Britain in a customs union after Brexit and her Cabinet is split over future customs arrangements with the EU.

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In a statement after the meeting, the EU group of business leaders said: "We appreciate the Prime Minister's openness to ERT views and were able to express our own views and concerns.

"The uninterrupted flow of goods is essential to both the EU and UK economies. That must be frictionless as with a customs union. We need clarity and certainty, because time is running out. Uncertainty causes less investment."

Downing Street said in a statement that the Prime Minister wants to keep future trading arrangements "as frictionless as possible".

Boris Johnson, David Davis and other leading eurosceptics have rejected the Prime Minister's plans for a customs partnership with the EU. Mr Johnson has described it as "crazy" amid concerns that it could lead to Britain staying inside the customs union.

They favour "maximum facilitation", which would use technology to enable highly-streamlined checks at the border.

However leading pro-Europeans in the Cabinet including Philip Hammond, the Chancellor, have argued that the approach would damage British businesses.

A No 10 spokesman said: "The Prime Minister... underlined the importance of ensuring that our future trading arrangements with the EU are as frictionless as possible, delivering on the commitments to avoid a hard border between Northern Ireland and Ireland, and allowing the UK to pursue an independent trade policy.

"The Prime Minister recognised the necessity of providing certainty for businesses, pointing to the agreement of an implementation period at the European Council in March to provide time to allow businesses to prepare for the new arrangements."

Downing Street said that the discussion had been "open and productive", adding that the Government and business leaders agreed on the need for "robust" data sharing after Brexit.

Mrs May has split up her warring Brexit sub-committee to try and thrash out a way forward on her two proposals for a customs deal - with each working group mostly opposed to the option they are considering.

The "max fac" group will comprise Business Secretary Greg Clark and Northern Ireland Secretary Karen Bradley - who were both pro-Remain - and the pro-Leave Brexit Secretary David Davis.

By contrast, the customs partnership will be examined by two Brexiteers - International Trade Secretary Liam Fox and Environment Secretary Michael Gove - and a lone Remainer, Cabinet Office Minister David Lidington.

There is concern in Government over a lack of progress ahead of a crunch Brussels summit later this month. The Customs Partnership working group has only met once. Ministers said that the Cabinet remains deeply divided over future customs arrangements. 

"The Prime Minister will have to come to a decision," a Cabinet source said. "Whatever she decides she risks alienating half her Cabinet."

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