THE director-general of the Confederation of British Industry has highlighted Scottish companies’ fears over Brexit, and damage already being done including loss of market share, and warned a no-deal departure is now “extremely possible”.

Carolyn Fairbairn voiced worries over the short and long-term impacts of Brexit, including the danger of medicine shortages, after holding a roundtable event with the business organisation’s members in Glasgow.

Ms Fairbairn, who warned a recession was “certainly highly possible” in the event of a no-deal Brexit and flagged the knock-on impact of such a downturn on business confidence, told The Herald: “I think one of the things that was most striking [is] many businesses are being affected now by the heightened risk of no-deal.”

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She noted that one “high-end”, specialist advanced manufacturer, with an 85 per cent market share globally, was “facing competition from a Japanese company”.

Ms Fairbairn said of this Scottish company: “They are already losing share to that [Japanese] company because of uncertainty [surrounding] Brexit.”

She noted that a number of members at yesterday’s event were already reporting loss of market share, and were particularly worried about the further effects if there were a no-deal Brexit.

Ms Fairbairn, who was joined by CBI Scotland director Tracy Black, said: “There were other members who expressed the same concerns – that Brexit was causing them to lose global market share [and] it would be very difficult to claw back. It is already happening. It is tougher for our global businesses out there trying to maintain their market share, trying to maintain their competitiveness.”

She added: “The point they [the specialist manufacturer] made, and several others round the table made, is, if you are a global player and you lose market share, it is just very hard to recapture. Every percentage-point is so hard-won.”

And Ms Fairbairn warned: “They [members] were particularly fearful of what would happen in the case of no-deal – that they would further lose market share.”

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Ms Fairbairn said: “Compared with a few months ago where no-deal felt like a relatively low probability, I think now it feels extremely possible.”

She is taking soundings on how prepared businesses are, what more they need to do and “what the effects will be even if they are prepared”. Companies from various sectors, including the leather and high-tech industries, construction, financial services and manufacturing, attended the event in Glasgow, with small family businesses among those involved.

Ms Fairbairn highlighted the CBI’s belief that Mr Johnson should be “straining every sinew to secure a deal with the European Union”, adding: “That will require compromise on both sides.”

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Asked to what extent she was worried about the danger of a no-deal departure, Ms Fairbairn replied: “We do recognise the Government are seeking a deal and applaud that. We also recognise the gulf in the current positions between the UK and EU is quite wide, that compromise might at the end of the day prove to be too difficult and no-deal is a possibility. We do think that businesses need to be prepared for every eventuality.”

Ms Fairbairn said she was “surprised” yesterday by the number of members flagging the “importance of the science base and European collaboration on R&D (research and development) investment”. While noting a university had, as would have been expected, raised this, she added: “We also had a number of manufacturing and construction members who were also involved in European R&D programmes.”

Ms Fairbairn noted that, even if the UK Government were to fund similar programmes in the event of a no-deal Brexit, this would not be the “same” in terms of benefit because they would not be Europe-wide. She noted such European programmes, in areas such as wing technology, battery efficiency and renewables, were “relationship-based”.

In the pharmaceuticals sector, she highlighted a “high level of preparedness” regarding medicines but nevertheless warned of a continuing danger of shortages.

Ms Fairbairn, noting the importance of small packages going to all parts of the National Health Service, said: “You only need a little bit to go wrong and there will be medicine shortages.”

In terms of transport delays, she noted that medicines were often on “mixed-load lorries”. She asked whether, in such instances, the whole lorry would be fast-tracked under Government plans or the load would have to be separated.

Ms Fairbairn also noted there were already shortages of medicines globally, with fast growth in Asian countries, and observed the UK was already “battling” to get its share.

She added that medicine shortages should continue to be regarded as “a major concern in the event of no-deal".

Ms Fairbairn highlighted the importance of focusing on the long-term, as well as immediate, effects of a disorderly Brexit.

She said of a no-deal scenario: “The negative impacts, short-run and long-run, are so serious.”

Ms Fairbairn cited as an example Scottish Leather Group, observing that most of its customers were in Europe and flagging the impact of significant tariffs in the event of a no-deal departure.

Citing this company as a “powerful example” of a firm that could do everything to prepare for Brexit in terms of the likes of stockpiling but not be able to prevent the competitive disadvantage of tariffs, she said: “That is the sort of long-term effect.”

Ms Fairbairn observed Scottish Leather Group would not see a compensating effect from a fall in sterling arising from a no-deal Brexit because it was a major importer of chemicals, used in its manufacturing process, from the EU. The sterling cost of these chemicals would, she noted, rise with a weaker pound.

She also cited the example of an infrastructure company attending yesterday’s event which had seen its returns from a major transport project dampened because of slower economic growth. And she noted challenges for future transport investment given such an economic backdrop.

Ms Fairbairn noted several members attending the Glasgow event had cited concerns about skills shortages.

She highlighted worries among businesses that, post-Brexit, the £30,000 minimum salary threshold for migrant workers could “badly affect the ability to attract particularly construction workers to the UK”.

Ms Fairbairn added: “There is a Scottish concern there which is, if London and the south faced a shortage of construction workers, they would be attracting them out of Scotland and there would be a knock-on shortage in the Scottish construction industry.”

She highlighted the CBI’s belief that there could be a “bounce” if a Brexit deal were secured.

The Glasgow event was the first of 11 such meetings Ms Fairbairn is holding with CBI members in British cities this week, a tour which will allow her to hear views on Brexit from around 400 businesses.