The UK government is coming under increasing pressure to soften its Brexit stance following last week´s inconclusive election result.
EEF is the latest group to call for a rethink on Brexit, with the engineering employer´s organisation calling for the UK to retain access to the single market and remain inside the customs union.
The group warned that failing a more “pro-business” stance from the UK government, an increasing number of firms could move investment outside the UK.
EEF chief executive Terry Scuoler said it was time for the UK government to change its tack and begin repairing relations with other EU nations.
“The Brexit negotiating strategy requires a careful rethink. Industry should be at the table, alongside whatever administration is formed, to help ensure we have the right negotiating position, which is something that's been sadly lacking until now,” said Scuoler.
The EEF intervention echoes the tone set by influential business organisation the CBI earlier this week, which called on the UK government to change its negotiating stance and drop Prime Minister Theresa May´s “no deal is better than a bad deal” approach.
There is still uncertainty as to what the shock UK election result and the hung parliament will mean for sterling and financial markets. While it is possible the UK could change course and seek to remain inside the single market and/or customs union, the EU has warned that the UK risks crashing out of Brexit negotiations with no deal if talks are delayed.
It already appears highly unlikely that the UK will be ready to begin scheduled Brexit negotiations with the EU next week; talks between the Conservative party and the Northern Ireland´s DUP over the latter´s support for a minority government are still in progress.
There is also talk that the Queen´s speech, traditionally used to set out a new government´s legislative agenda, could also be postponed. This had been expected to take place on 19 June.
Sterling, which is currently trading at just under $1.27 to the US dollar, has lost around 2% since the election.
Nevertheless, a rethink that would see the UK government attempt a U-turn and embrace a soft Brexit, with membership of both the single market and customs union, would likely be extremely positive for the pound. Sterling is currently about 15% lower than it was before last year´s fateful Brexit referendum.
A poll by Reuters released early on Tuesday found that the vast majority of economists believed the odds of a hard Brexit had fallen since the UK election. Some 33 of the 49 economists surveyed said the chance of a hard Brexit had receded “somewhat”, three answered “significantly”, while eight believed there was “no change”.
However, a soft Brexit, with the UK staying inside the single market and customs union, would likely require the UK to remain inside the European Economic Area (EEA), as a member of the European Free Trade Association (EFTA).
The EFTA counts countries such as Norway among its members, assuring the free movement of people, goods and capital across the European single market. This would make it difficult for the UK to cut immigration from other European countries, a central plank of the successful Leave campaign in last year´s Brexit vote.