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Reform or be swept away by populism, May warns big business

Theresa May has warned global business leaders that they must reform or face a surge in far-right and far-left populism.

In a powerful critique of business delivered at the World Economic Forum in Davos, the prime minister said that multinational companies could no longer afford to play “by a different set of rules to ordinary working people”.

She said that this meant businesses “paying their fair share of tax, recognising their obligations and duties to their employees” and trading with smaller companies “in the right way”.

Mrs May added that unless businesses responded to these issues, the forces of “liberalism, free-trade and globalisation” that they all took for granted would be “called into question”.

“Across Europe parties of the far left and the far right are gathering support by feeding off an underlying and keenly felt sense among some people — often those on modest to low incomes living in relatively rich countries around the West — that these forces are not working for them,” she said.

“And those parties, who embrace the politics of division and despair, feed off the sense among the public that mainstream political and business leaders have failed to comprehend their legitimate concerns for too long.”

Mrs May added that businesses need to address executive pay and provide greater accountability to shareholders.

“I want a new approach that harnesses the good of what works and changes what does not [so] we can maintain support for the rules-based international system,” she said.

Mrs May’s speech came as a series of major businesses made clear they were reconsidering their plans for operations in Britain after her announcement on Tuesday that she will take the country out of the single market.

HSBC said that 1,000 jobs at the bank’s London operation could move to Paris while Barclays is looking to route activities through Ireland and Germany, and Switzerland’s UBS is preparing to move posts from Britain to the continent.

Toyota’s chairman, Takeshi Uchiyamada, told the Financial Times: “We have seen the direction of the prime minister of the UK, [so] we are now going to consider, together with the suppliers, how our company can survive.”

Writing in The Sun, Mrs May urged people to “stop fighting the battles of the past” and accept that the UK is going to leave the European Union, insisting that Brexit could make the UK stronger and fairer.

Mrs May said the modern industrial strategy that she will launch next week was part of a plan to turn post-Brexit Britain into a “great meritocracy” and create a “more united nation” that “works for ordinary people”.

“For government, it means not just stepping back and – as the prevailing orthodoxy in many countries has argued for so many years – not just getting out of the way,” she told the business leaders in Davos.

“It means stepping up to a new, active role that backs businesses and ensures more people in all corners of the country share in the benefits of its success.

“And for business, it means doing even more to spread those benefits to more people. It means playing by the same rules as everyone else when it comes to tax and behaviour. And it means putting aside short-term considerations and investing in people and communities for the long-term.

The European Parliament’s chief Brexit negotiator, Guy Verhofstadt, warned that it was an “illusion” to suggest the UK could leave the EU but retain the benefits of tariff-free trade.

Writing in The Guardian, Mr Verhofstadt said that no one in the EU wanted to punish the UK.

But he said that “it is an illusion to suggest that the UK will be permitted to leave the EU but then be free to opt back into the best parts of the European project, for instance by asking for zero tariffs from the single market without accepting the obligations that come with it”.