A Brexit transition deal may be “too late” if it is not agreed soon, a leading City lobby group has warned.
TheCityUK said businesses were well into contingency planning for alternative scenarios so the value of such a deal, even it is reached, is “disappearing by the day”.
Plans may involve moving operations overseas and if that has already started it may not be practical to start bringing them back again, the body said.
Miles Celic, TheCityUK’s chief executive, said: “Without progress soon, it may be too late.”
The intervention comes after EU chief negotiator Michel Barnier warned of “deadlock” in talks over the UK’s divorce bill.
It echoes a warning by technology and industrial body CEEMET, which represents more than 200,000 firms in Europe, that political leaders must deliver a meaningful transitional arrangement by the end of the year.
If not, they risk irrevocable damage to complex supply chains, the group warned.
The UK and EU have agreed “efforts should accelerate” over Brexit negotiations following the Prime Minister’s visit to Brussels.
Following a working dinner in the Belgian capital on Monday night, Theresa May and European Commission president Jean-Claude Juncker described a “constructive and friendly” exchange as they prepared for a crunch EU summit this week.
Britain is seeking a transition deal once Brexit is officially triggered in March 2019 in order to avoid a so-called “cliff-edge” departure from the bloc.
But business groups complain that it is becoming difficult for them to plan until it becomes clear what arrangement is going to be reached.
TheCityUK, which represents UK-based financial and related services industry, said a transition deal must be reached by the first quarter of 2018 at the latest.
It said that without this in place, more firms will be forced to accelerate contingency plans “with significant international investment and jobs likely to leave Europe as a consequence”.
Mr Celic said: “EU and UK negotiators cannot delay discussing a transitional deal any longer if they want it to hold any real value. Firms are beyond the planning stage now.
“If they haven’t done so already, most will be ready to press go on their contingency plans in the New Year.
“They can still take their foot off the accelerator if a transitional deal is agreed, but without progress soon, it may be too late.
“Once businesses start moving, there is no reverse gear. It is simply not efficient or economically viable to move operations twice.”
Separately, CEEMET director general Uwe Combuchen said: “Companies across the continent want to see swift progress on transitional arrangements to avoid unintended consequences and economic collateral damage arising from a failure to agree an orderly exit.”
The call was backed by EEF, the UK manufacturers’ organisation and a member of CEEMET.