Belfast Telegraph

Lord Rose: Government preparing for 'serious rainy days' during Brexit process

Britain's economy may be facing some "serious rainy days" as it withdraws from the European Union, the former chairman of the referendum Remain campaign has said.

Former Marks & Spencer chief executive Lord Rose said this week's Budget made clear that the Government was setting aside money for the possibility of tough times due to Brexit.

He warned that companies can be expected to become "cautious" over investment as the Brexit process takes place, and warned that the imposition of new tariffs and taxes resulting from EU withdrawal could lead to "difficult times".

Despite chairing the Stronger In campaign in 2016, Lord Rose insisted that he was now "100%" behind the Government's drive to achieve a successful Brexit.

He was critical of other business leaders who were now expressing concerns about Brexit, despite having failed to make the case for Remain during the referendum.

Lord Rose told BBC Radio 4's Today programme: "What I worry about is that ... not only in retail but in other sectors as well, companies will do a little bit what consumers are doing and they will become cautious.

"They will keep money back for a rainy day, they'll say 'I won't do today something that I might be able to put off to tomorrow', which is prudent but not good for the economy.

"You can't defy gravity, you can't be like King Canute. The tide is coming in. If we have a really difficult time in negotiating our way out of Europe to the extent that it means we have to put tariffs or taxes or whatever else up, which may act as a further brake on the consumer, then I think we could have some difficult times.

"I hope not. I'm fully behind the Government. I didn't vote for Brexit, but I'm absolutely 100% behind them. Now we've agreed to do it, let's do it, let's all pull behind the Government and try to get the best possible deal."

Lord Rose said Philip Hammond's Budget made clear that the Government was holding back spending power in the expectation that it may need a war-chest to deal with the problems of Brexit.

"One thing that was evident to me in the Budget was how little wriggle room the Chancellor has got," he said.

"I think there's money being put aside for a rainy day.

"The finances are slightly better than they thought they were, but the Government knows there is a possibility of serious rainy days coming and they want to keep some firepower."

Despite his key role in the Stronger In organisation, Lord Rose ended up taking a relatively low profile during the referendum after the Leave side took advantage of a gaffe early in the campaign when he declared that leaving would lead to higher wages.

However, he insisted that he did not regret his involvement in the Brexit battle.

"I don't regret it because, sadly, nobody else agreed to do it - which is more of a reflection about the willingness of some of our business leaders to stand up and be counted," said Lord Rose.

"It's all very well for them to say after the event that they wish they'd done more - they didn't.

"At the time, there was a real shortage of people. I did it. Personally, it was a difficult time for me, but it only reminded me of one thing for the future, and that is that you should stick to what you know."

Lord Rose, now chairman of online retailer Ocado, said consumers could expect to see the impact of Brexit feeding through into their shopping bills.

He told Today that at the time of the referendum last June, "the UK economy was doing pretty well so it was unlikely to stop overnight, and all the talk about Armageddon, in retrospect, was a mistake".

But he added: "There's no doubt about it that, as we move forward, we are moving to a new place, and the new place is that we are facing headwinds. The most obvious ones we have seen are with the depreciation of the currency.

"You can't buy goods - and we are a big importer of goods, whether they are electronics or clothing or food - at 1.55 to the dollar last year and 1.25 this year without having to pass some of it on to the consumer.

"All retailers will tell you that they are not putting prices up. That's a bit of a myth. All of us are going to have to pass some of that on to consumers. Of course we're going to try to mitigate it by being more efficient and negotiating better deals, but the fact of the matter is that inflation is coming and we've seen that already happening."

Consumers were already responding to the new circumstances by reining in spending, he said: "It's across the piece. Everybody is buying a bit less. We are eating a bit less, we are buying less clothes.

"There is just a slowdown and it's really about confidence ... Confidence is a bit muted."