Businesses and economy aren’t prepared for Brexit

A group of business leaders have warned the Government that the UK’s economy is not yet ready for Brexit and companies aren’t properly prepared for the severe disruption predicted in the months ahead.

Not only are many businesses having to make important decisions about future trade with the uncertainty of having no deal, but they are also still facing a tough period due to the ongoing COVID-19 pandemic. 

Despite talks of a deal being just around the corner, business groups are calling for urgent guidance and support after the Prime Minister announced that the UK could still face trading terms “that are more like Australia’s”, which would effectively mean leaving without a deal and relying on World Trade Organization terms and costly tariffs.

Among those reaching out to the Government is Carolyn Fairbairn, the Director-General of the CBI. She said: “After four years of negotiations and so many hurdles crossed, this is no time to give up.

Neither side can afford to fall at the final fence. A deal is the only outcome that protects Covid-hit livelihoods at a time when every job in every country counts.”

She has been joined by Mike Cherry, the Chairman of the Federation of Small Businesses (FSB), who said firms are not ready to cope with a no-deal Brexit once the transition period ends on 31 December 2020. “They’re being told to both prepare and simultaneously manage a fresh set of Covid restrictions.

Many simply don’t have the time or money to make adjustments, even if they want and need to,” Mr Berry added. His comments were recently backed up by research, which showed that around a quarter of UK businesses did not think they would be ready for new trade arrangements by the start of 2021.

Neil Wilson, Chief Market Analyst at the financial trading platform Markets.com, has said an agreement can still be made at the eleventh hour if both sides are willing to make concessions.

Looking at the Government’s approach, he added: “It’s not entirely bluff – the UK would through gritted teeth accept no deal because politically Johnson is taking so much flak over the pandemic that he has no room to ‘let the country down’ over Brexit.”

Ian Wright, the Chief Executive of the Food and Drink Federation, has also shared his thoughts on a no-deal Brexit, warning that it would cause severe disruption to businesses.

He added: “The Prime Minister’s statement signals that we are heading into very dangerous territory. The perils of a no-deal exit for GB food and drink manufacturing remain as real as ever.”

The Organisation for Economic Co-operation and Development has already warned that a disruptive end to the Brexit transition period could threaten the country’s recovery from the Coronavirus pandemic.

It has indicated that a no-deal scenario could leave the economy 6.5 per cent smaller in the next few years than would have been the case if existing arrangements with the EU had been maintained.

The next few months are going to be a critical and difficult time for many businesses. If you have a client that is struggling due to the current uncertainty, please contact us.