London First urges politicians to avoid disastrous no-deal scenario as survey reveals just 2 out of 5 businesses are Brexit ready
12 December 2018
London First, the capital’s leading business organisation, warned that political uncertainty risks putting the UK on a path to a disastrous no-deal scenario, as a new survey revealed that only 2 in 5 businesses feel well prepared for Brexit.
The survey of more than 850 senior 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.
The findings were released as London First’s CEO Jasmine Whitbread urged politicians to show leadership and resolve to avoid a disastrous no-deal scenario.
She said: “It’s clear many businesses aren’t ready for Brexit – let alone no-deal — and feel badly let down by the Government’s failure to help them prepare.
“After last night’s vote, the Conservative Party needs to get its act together fast and find a solution that can command a majority in the Commons, so we don’t end up crashing out of the EU by default.
“Every day’s delay prolongs the uncertainty for businesses and the public, compounding the price the UK has already paid through lost investment and lower growth.”
London First has been calling for a Brexit deal which retains the benefits of the customs union, safeguards the service sector and keeps the UK open 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 restructuring27% 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 EU and UK (57%), as well as free flow of capital and access to EU finance (56% and 55% respectively) and free movement of people (51%).