As the government approves £2bn of spending on ‘no deal’ Brexit preparations, London First’s CEO Jasmine Whitbread urged politicians to step back from the brink and ensure the UK doesn’t crash out of the European Union without a deal.
Warning that no deal would have a disastrous impact on the economy, she revealed that just two out of five businesses feel well-prepared for Brexit.
“Brexit negotiations have not only swallowed up billions in lost investment and lower growth, but two years of parliamentary time. The Government is now intending to squander a further £2bn preparing for a‘no deal’ Brexit which has no parliamentary support and which they have in their gift to prevent.
“Not only would no deal represent a hammer blow to the economy, this expenditure is both morally and politically unconscionable at a time when our hospitals, public services and housing are crying out for investment.
“Instead of this political point-scoring and vanity contests, we need the Government to come up with a Brexit solution that can command a majority in the Commons, or we run a real risk of crashing out of the EU by default. We need to take no deal off the table now.”
The call comes as London First published a survey of more than 850senior business leaders, running firms with turnovers of £1m+, found just 41% feel ready for Brexit and almost a fifth (17%) feel badly prepared. The remaining businesses are unsure how well their planning will help. There is a marked difference between larger and smaller firms: half of larger businesses (51%) have plans in place compared with just over a third of small and medium-sized enterprises (38%).
Of those firms saying they are well prepared, most have triggered at least one form of contingency for Brexit already, including reviewing markets, supply chains, or considering relocating.
Most companies lay the blame firmly on the Government, with nearly two thirds (63%) saying its support to help them prepare has been insufficient. Just 16% think Government support has been good and 18% said it was neither good nor bad.
London First has been calling for a Brexit deal which retains the benefits of the customs union, safeguards the service sector and keeps the UKopen to the talent and skills the economy needs.
Looking at the findings in more detail, the survey found:
Uncertainty about the future relationship with the EU is the overwhelming reason why businesses feel unprepared (79%), followed by nearly third saying they wouldn’t know where to start (32%) and a fifth (21%) saying they lack the capacity or resource to plan for all the possible outcomes. A minority (9%) felt it wasn’t necessary to prepare at all.
Among firms who have begun preparing, they are looking at a range of options:
38% have shifted their customer base
38% have reviewed their supply chains
28% have considered relocating from the UK or restructuring 27% have assessed the cost of potential new tariffs
25% have reviewed distribution and logistics
25% have reviewed legal contracts
21% have reviewed the impact on working capital
As for when companies will implement their contingency plans, one in three firms (33%) plan to make changes before 29 March 2019:
17% say after 29 March 2019 but before the end of 2020, so the planned ‘transition period’
8% say they have already made the necessary changes
20% don’t know
9% don’t think their business needs to make any changes ahead of Brexit.
Asked for their views on what a good deal would look like, two-thirds said they valued close co-operation on security (66%), followed by the free flow of services and data (64% each) and continuation of free movement of goods (63%).
More than half want a common regulatory framework between the EUand UK (57%), as well as free flow of capital and access to EU finance (56% and 55% respectively) and free movement of people (51%).