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The Confederation of British Industry (CBI) is in talks with manufacturing group Make UK over a potential merger, in a sign the UK’s main business lobby is facing financial difficulties.

The two groups have been discussing a closer alliance in areas such as industrial strategy policy and have not ruled out merging into a single bloc.

“Make UK and the CBI are in early discussions on how the two parties can work more closely together,” Make UK said. “These discussions have been positive and constructive, but are still at an early stage.”

The Confederation of British Industry provided a nearly identical statement confirming that the two sides had begun active negotiations.

“The CBI and Make UK are discussing how the two parties could work more closely together. These discussions are positive and constructive, but still at an early stage,” the CBI said.

News of the talks, first reported by Sky News, underscores the financial challenges facing the CBI since it was embroiled in a sexual misconduct scandal earlier this year. It is unclear whether the name would disappear if CBI were to merge with its manufacturing-focused rival.

A source familiar with the matter told the FT that talks had been going on for several months and were “quite well advanced”.

“The two sides have been talking for some time,” they said. They added that the CBI’s financial woes meant “time was ticking”.

A wave of resignations from member firms has hit Britain’s largest business lobby after it faced multiple allegations against former female employees. These groups include Aviva, BP, Drax, KPMG, Tesco and NatWest.

Following the allegations, the CBI appointed its former chief economist Rain Newton-Smith as chief executive and began a “thorough” review of its culture.

At an extraordinary general meeting in June, CBI members voted to approve a plan to overhaul the organisation’s governance and culture, while opening the door to a gradual resumption of its public-facing activities.

The drop in expected membership revenue has forced the CII to tell staff it needs to restructure and cut wages by a third, making layoffs inevitable.

CBI is Closure of most overseas offices There are similar initiatives in Beijing, Delhi and Washington as part of efforts to reduce costs.

In June, the Financial Times revealed that Make UK was in talks to take over the CBI’s macroeconomics unit and its range of investigations, although the idea appeared dormant.

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