A cabinet minister has admitted Brexit has created “frictions” between Britain and the European Union that has undermined foreign investment in the UK.
Work and pensions secretary Mel Stride also said the political turmoil under the Conservatives was also damaging the economy.
His concession followed Paul Drechsler, the chairman of the International Chamber of Commerce UK, saying Labour is now winning the argument on business.
Drechsler, who was a skills adviser to former Tory prime minister David Cameron, blamed Brexit and the chaos afterwards for reducing the willingness of firms to invest in Britain.
Asked about the businessman’s remarks, Stride told the BBC’s The World At One programme: “I think if you have a situation where you create frictions between yourself and your major trading partners, I think you have to accept that that will have an impact.”
Stride, who voted to Remain in the 2016 referendum, conceded it was “taking a bit of time” to benefit from the business opportunities from Brexit, but added: “They are coming through – you can see them coming through.
“We’ve moved on now and I accept that and I cannot argue now that there are not major opportunities, what we need to do now is get out there and capitalise on them and that’s what we’re determined to do.”
Britain is struggling with high inflation rates and the International Monetary Fund has forecast that it will be the only G7 nation, including Russia, to see its economy shrink this year.
Bank of England policymaker Jonathan Haskel has said that Brexit caused investment in UK businesses to plateau and dealt a productivity penalty worth £29 billion.
Drechsler, a former head of the Confederation of British Industry, blamed former prime minister Boris Johnson’s threats to breach international law over Brexit and his unlawful prorogation of parliament as among the issues scarring off businesses from investing in Britain.
“If there’s one thing you could depend on in the UK for centuries it was adherence to the rule of law but over the past small number of years we’ve prorogued parliament, we’ve rejected international treaties we’ve just signed,” he said.
“We’ve talked about our judges as enemies of the people and now we’re about to bin thousands of EU laws without having any alternative for business to rely on.
“It’s self-evident that the trend lying up to 2016 has shifted significantly over the past six years.”
He said businesses are “struggling” to employ the people with the right skills for jobs.
“That’s an obstacle to economic growth of our own making,” he said.
He said Sunak’s Conservatives are “incredibly fragmented, incredibly divided and do not have a brilliant narrative to attract investment”.