Business split over benefits of a Brexit transition periodSeptember 11, 2017
- 40% expect a positive impact but one in three unsure it will help them make decisions
- Transition agreement needs to be in place by June 2018 to realise benefits
- Most businesses want a one to three-year transition phase
Four in ten UK businesses believe a transition period after the UK’s exit from the EU will have a positive impact, enabling them to unblock investment and recruitment decisions that they put on hold after the Referendum, according to a new study from London First and Lloyds Banking Group.
Most businesses want to see a transition arrangement that covers all the elements of the existing EU relationship – freedom of goods, services, capital and talent; a common set of tariffs and EU legal arrangements.
London First and Lloyds Banking Group surveyed over 1000 UK companies with an annual turnover above £1m.
Many firms feel that last year’s referendum has had a big impact on their businesses. Over half (54%) said they had either been forced to put investment or recruitment on hold, revised their supply chains; or faced reduced demand from their customers.
When asked how long a transition period should last, the most frequently given answer was one to three years. The timeframe in which it was agreed was seen as important too, with one in five (21%) saying a transition agreement needed to be in place by the end of the year and a further 22% of respondents saying they needed it by June 2018.
Companies with an annual turnover of £750m or more were the most positive about a proposed transition period, with nearly half (47%) said it would help their business, compared to 35% amongst SMEs1.
Only 18% of respondents to the London First and Lloyds Banking Group survey felt it would have a negative impact.
But a significant proportion of companies, over one in three (35%), felt the promise of a transition period would have no impact on their ability to make decisions and plan ahead.
Jasmine Whitbread, chief executive of business group London First, said: “It’s clear that a transition period is better for business than ‘no deal’. But to encourage continued economic growth and secure jobs, the Government must act now on a transitional agreement while setting out what the UK’s long-term future will look like. Companies need to be able to see ahead to invest in and hire for the future, we can’t afford to wait much longer.”
Edward Thurman, Managing Director and Head of Financial Institutions, Lloyds Bank Commercial Banking, said: “The findings of the survey reinforce what we already know from conversations with many of our business, corporate and institutional clients. Many firms feel a transition period would help them to prepare for Brexit, and the sooner the UK and EU27 agree terms, the less uncertainty for businesses there will be.”
YouGov polled 1036 UK businesses between 7-18 August 2017. 468 respondents had an annual turnover between £1m-£24.9m; 316 between £25m and £749.9m; and 186 above £750m.
1 Companies with an annual turnover between £1m and £24.9m
A pdf of the report is available here