Hard Brexit will do 'serious and lasting damage to the UK economy' say business leaders

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Business leaders have publicly warned the Government to avoid a 'hard' Brexit, saying it could do 'serious and lasting damage to the UK economy'.

The joint letter from business groups including the CBI and the EEF, the industry body for engineering and manufacturing employers, said Brexit 'must deliver barrier-free access to the EU's Single Market, which is vital to the health of the UK economy'.

Failing to get good terms and falling back on World Trade Organisation rules 'would have significant costs for British exporters'.

Warning: The letter was signed by Carolyn Fairbairn of the CBI, pictured, and other bosses

The letter added that '90 per cent of UK goods trade with the EU would be subject to new tariffs. 

'That would mean 20 per cent in extra costs for our food and drink industry and 10 per cent for our car producers'.

The warnings came as industry took fright at the tone of the Brexit debate, which has pointed towards a firm break with the EU that would involve leaving the single market and customs union and depending on WTO rules.

The letter, signed by Carolyn Fairbairn of the CBI, Terry Scuoler of the EEF, Chris Southworth of the International Chamber of Commerce and Julian David of techUK, said: 'Every credible study that has been conducted has shown this WTO option would do serious and lasting damage to the UK economy and those of our trading partners.'

Their plea that access to the EU for financial service companies should be 'a major priority' came as the City grew more nervous of a hard Brexit.

John Cole, a financial services partner at accountancy giant EY, said: 'I think the assumption now, give what we have heard, is we are heading for a clean Brexit.'

He added the fears were causing a lot of firms to 'look carefully at their European business model.'

Another adviser of top multinational financial services companies was more blunt, predicting some would start to move some staff 'this side of Christmas'.

'We are getting close to a point where firms move to future proof their business to get ahead of the politics,' he said.