Theresa May, U.K. prime minister, delivers a statement, following a special session of Cabinet to discuss the Brexit deal, outside number 10 Downing Street in London, U.K., on Wednesday, Nov. 14, 2018. May will ask her divided Cabinet ministers to back her Brexit deal or quit, as the U.K.’s divorce from the European Union enters its most dangerous phase yet. Photographer: Simon Dawson/Bloomberg
The UK's business leaders are backing Theresa May and the EU's withdrawal agreement © Bloomberg

After staying largely quiet during the Brexit referendum, the UK’s business leaders have finally taken a position: they are backing prime minister Theresa May and the EU’s withdrawal agreement.

The problem is that large parts of the electorate appear to reject the agreement. Many Leavers detest it because they say it ties Britain to the EU without any say over how its rules are made. Remainers dislike it for the same reason, arguing that full EU membership is far better.

But Carolyn Fairbairn, director-general of the CBI, on Monday told the employers’ group’s annual conference: “The prime minister’s agreement is not perfect. It is a compromise. But it is hard-won progress.”

Other business leaders are pleased that the agreement keeps the UK’s position unchanged during the transition period, which will last at least until the end of 2020. “This is about playing the cards we have been dealt rather than wishing for a better hand,” Roger Carr, chairman of defence group BAE Systems, told the BBC last week.

The problem is that parliament looks unlikely to approve the withdrawal agreement, leaving the options either of the UK leaving the EU without an agreement, or the — at present — unlikely possibility of a second vote.

Business has played a useful role in pointing to the disruption that a no-deal exit would bring and in highlighting the importance of immigration, both skilled and unskilled, to the UK economy.

But its reluctance to spell this out during the referendum, when it might have made a difference, and its backing of what looks like a losing proposition now, show why we should not count on business leaders to take a political lead.

There are five reason for this.

First, they do not generally know a huge amount. I have discussed politics with business leaders for years. I have not come across many with greater insight into current events than the averagely well-read person.

Second, they are too timid. Most are reluctant to upset their customers. On divisive issues, such as Brexit, they prefer to keep quiet until, as here, it is almost too late. They almost certainly overstate the dangers of standing up when it matters. They are unlikely to suffer any damage. Most putative consumer boycotts fizzle out as people are more interested in quality, availability and, especially, price.

Third, business is too narrowly focused. Many UK business leaders appear happy to pocket the two standstill years of the transition period, with the hope that it may be extended. Few appear to be looking further than that, to the long-term relationship that the UK will have with the EU. They seem happy to leave that to another day.

It is unusual for business to point to the long-term possibilities when politicians have failed to do so. A rare example came when South African business leaders, under apartheid, made contact with the African National Congress and worked to persuade the government that its banned opponents were open to a deal. It is difficult to think of many other instances of business being ahead of events.

Fourth, the demands of business sometimes cause its leaders to misplace their moral compasses. Look at Facebook’s admitted slowness in tackling Russian disinformation on its platform. In search of sales, some companies have been too ready to tie themselves to disreputable governments. BAE has longstanding ties to Saudi Arabia. KPMG and McKinsey entangled themselves with those surrounding Jacob Zuma’s corrupt government in South Africa.

You could argue that today’s politicians suffer from all these defects too, but, in democracies, we, the voters, largely bear responsibility for that. We have not held politicians to account or, if we are unhappy with the ones we have, have not supported new ones or put ourselves forward.

This is the fifth reason we should not look to business for political leadership. Business is not democratically accountable. We can push companies to be more responsible or to take greater care of the environment but, in the end, it is only regulation, exposure and rules requiring better governance that ensure business behaves better.

The political class, in many countries, may have failed us. But the cure for that is better politicians. Business leaders cannot take their place.

michael.skapinker@ft.com
Twitter: @Skapinker

Letter in response to this column:

A business’s priority is to reassure investors / From Owen Kelly, Edinburgh University Business School, UK

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