Comment

Prime Minister’s CBI snub leaves business out in the cold

Johnson’s no-show at the lobby group’s annual conference threatens to instill a fresh loss of trust in the Conservative Party

Boris Johnson CBI
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It’s not quite “f--- business” but the Prime Minister’s decision to cancel an appearance at the CBI annual conference two days after announcing a second national lockdown may leave bosses wondering if the Government has finally adopted that as its official motto.

With Dame Carolyn Fairbairn handing over the reins at Britain’s top business lobby group, this was a chance for the Prime Minister to build bridges. Instead, he pressed “detonate” with what will be interpreted as a pretty extraordinary snub at a time when many business owners must feel like throwing in the towel.

It’s not even as if he had to appear in person. Perish the thought. Even a 10-minute Zoom call and a waffly speech knocked up overnight by a junior script-writer about how the Government was “standing side by side” with business, or some equally empty platitude, would have been better than nothing.

Asking Alok Sharma to be a last-minute stand-in is hardly compensation. The Business Secretary seems like a perfectly nice chap but he’s been conspicuous by his absence from the front line during this crisis.

 

Perhaps Boris was afraid of what he might hear. So, here’s a flavour anyway: Fairbairn described lockdown 2.0 as a “body blow”; Helen Dickinson of the British Retail Consortium said the new measures would cause “untold damage”; former Tory donor and outspoken plumber Charlie Mullins told the Financial Times that the business community had been “sold down the river”.

And in case that sounds like knee-jerk rhetoric,  businesses queued up on Monday morning to quantify the likely damage.

Assuming MPs rubber-stamp the Government’s latest shutdown proposals, Primark owner Associated British Foods estimated £375m in lost turnover and £37m of pre-tax earnings, added to the £650m a month in sales it lost during the first lockdown.

Ladbrokes Coral parent GVC is pencilling in a £37m hit to the bottom line if all its betting shops are forced to bring the shutters down, while Hiscox estimates a $30m (£23m) to $40m knock in “business interruption” payments from big event cancellations.

Ryanair’s Michael O’Leary was typically less restrained as the airline swung from a €1.2bn (£1.1bn) profit to a €400m pre-tax loss in the first half of the year.

He reckons a second lockdown will solve even less than the first, branding restrictions “a failure” and “cover-up for government mismanagement”.

Meanwhile, investors are frantically scrambling to work out the winners and losers this time around.

Cue a vicious sell-off of retail, leisure, hospitality and travel stocks, with JD Sports, ABF, Cineworld, JD Wetherspoon and IAG among the big fallers; and the supermarkets, particularly Ocado, as well as Just Eat, and pound shop king B&M Retail, the pick of the risers.

Having thrown £300bn of state support at the economy, the Cabinet may wonder what else it could do.

After all, we’ve had the furlough scheme; Covid loans; a stamp duty holiday, which has put a rocket under the housing market; grants for small businesses; and Eat Out to Help Out.

Yet, companies insist more is needed.

And, as Fairbairn points out, a Brexit agreement was about the only thing that might have softened the blow. An “economic” and “moral necessity” was how the outgoing CBI chief rather nicely put it. However, it seems likely to be beyond the capability of this bungling government.

But here’s the unanswered question that really rankles with businesses: what effect will closing down the economy actually have on the transmission of the virus? Increasingly, the suspicion is very little.

As the BRC pointed out, research from Sage, the Government’s scientific advisory group, concluded that shop closures would have a minimal impact, not least because retailers had spent a fortune Covid-proofing their premises on the instruction of ministers.

Sure, we are in the middle of a pandemic and the Government has its hands full.

But the whole point about the decisions being made is that they balance the nation’s health with its wealth. The Prime Minister must know he has failed on that front, which may explain the no-show. Why even bother pretending anymore?

No wonder Keir Starmer was quick to stick the boot in. “The Labour Party is now under new management. We recognise that businesses with high standards are the only way to create a good economy and the only way to fund a good society,” he said with barely contained glee.

Will Nov 2 be remembered as the date that Labour replaced the Conservatives as the natural party of business? Much more of this and that won’t sound like such a stretch.

Flush with confidence

In the absence of political leadership during these times of great uncertainty, it has fallen to loo roll maker Accrol to lift the public mood with a reassurance that stocks remain plentiful. It says something when that feels like a genuine public service announcement.