Businesses cannot afford to put their faith in politicians to produce a Brexit resolution, and should be considering all reasonable preparations for no deal, the Institute of Directors said today.
Producing figures that showed that the extension until October had had little initial impact on firms’ Brexit planning, the IoD urged business leaders to use the time left to ensure they understand their potential exposure to leaving the EU this Autumn without a deal, and to take sensible precautions.
IoD figures show that the proportion of its members who had activated contingency plans increased slightly between January and April, from 18 to 23%. Overall however, more than half of firms surveyed had still not engaged in any contingency planning, and only 4% said they would be using the extension period to pick up the pace.
There has been very limited financial support for small businesses to prepare from central government, despite repeated calls from the IoD for Brexit planning vouchers to help SMEs get the professional help they need for complex trade and legal issues.
Edwin Morgan, Interim Director General of the Institute of Directors, said: “This week’s vote won’t be the last twist in the Brexit saga, but it made clear how real the possibility of no deal is. Business can have no absolute reassurance that an agreement will be reached, particularly given the commitment of some Conservative leadership candidates to leaving the EU in October with or without a deal. It feels like the extension is at risk of being wasted.
“It shouldn’t need saying, but many seem to have forgotten that getting a deal would be by some distance the better outcome, both for the UK and the EU. No deal is not ‘clean’, the mitigations announced so far are temporary, incomplete and untested with industry, and we would then have to enter into talks with the EU all over again. Far from providing clarity, a WTO exit simply extends uncertainty about the future, so it is no surprise a clear majority of IoD members say no deal would harm their business.
“If businesses can’t have faith in politicians, that means they have to look out for themselves. With business costs rising in many quarters, and management time precious, it’s understandable that firms don’t want put resources towards preparing for something we still hope won’t happen. But the risk of no deal is very real, and so we’d urge all businesses, if they haven’t done so already, to carefully consider their exposure and draw up mitigation plans now.”