It is not realistic or right for UK firms to distance themselves from China amid a need for stronger global trade, according to the head of one of Britain’s most prominent business groups.
Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), will say in a speech that the UK must not listen to the “siren call of protectionism” in its trade policy.
It comes amid a backdrop of a looming global trade war after US President Donald Trump announced plans to impose new tariffs.
Over the weekend, the Trump administration confirmed plans to introduce 25% tariffs on imports from Canada and Mexico, although the start of these has been delayed for a month.
On Tuesday, Mr Trump imposed 10% tariffs on China, sparking instant retaliation from Beijing, which launched its own tariffs on coal, liquified natural gas and crude oil.
The CBI chief will tell an audience at the University of Oxford on Wednesday that the UK “must not” fall behind one of the key trading blocs in the case of a potential trade war.
“We must project the UK as a world leader in trade, innovation and sustainable economic growth,” she will say.
“There may be tension between the established big blocs – the US, the EU and China.
“There may be pressure to fall in behind one or more. But we must not.
“Engagement is always better than protectionism, or sticking our heads in the sand.
“When it comes to China, we must be practical.
“Yes, let’s recognise the security concerns, but full decoupling from China is not realistic and it is not right.”
She also stressed that boosting business confidence must be a key commitment for the Government.
It comes three months after Ms Newton-Smith said the Labour Government’s autumn budget caught firms “off guard” and would undermine investment and jobs.
On Wednesday, Ms Newton-Smith will stress that firms are “straining” under the burden of the budget.
She will add: “A business sector that has seen its overheads increase and its headroom for investment squeezed.
“If we’re to get business investing, this must be only the start of a real confidence campaign.”
