Pandemic will magnify impact of no-deal Brexit, warn business leaders
- Credit: PA
The coronavirus pandemic will magnify the impact of a no-deal Brexit, new research suggests.
The Institute of Directors (IoD) has warned of a potential “double hit” from Covid-19 and leaving the EU without a trade deal.
A survey of almost 1,000 company directors found only one in 10 does not believe the pandemic will magnify the impact of a no-deal Brexit on their organisation.
Just under half of respondents said they are not fully prepared for the end of the transition period, while nearly a quarter reported their company may not be ready in time.
Around one in four of those polled said they do not expect Brexit to affect their organisation.
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Many directors said their company has built up cash reserves and plans to increase stockpiling, although the IoD said it is worrying some firms still need to obtain EU licences and authorisations.
Allie Renison, senior policy adviser at the IoD, said: “The prospect of no deal would be daunting enough, let alone dealing with it in the middle of a global pandemic.
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“These disruptions won’t cancel each other out, if anything they would compound the pain for British businesses.
“When it comes to preparing for Brexit proper, directors’ hands have been tied by a number of constraints and competing pressures. Reacting to the pandemic has taken up so much of business leaders’ time and energy throughout the year. On top of this, much of the information companies need is still subject to negotiations.
“Brexit adjustments will further add to businesses’ cashflow challenges in the months ahead. The government must look to how it can smooth that process.
“Financial support as seen in other countries, whether through vouchers to help access advice or through extending tax reliefs to facilitate that adjustment, would give small firms a much better chance of coping.”
Shadow business secretary Ed Miliband said: “Businesses are experiencing extreme uncertainty, facing the pressures of the coronavirus crisis, a deep recession and the end of the transition period approaching.
“It is vital that Boris Johnson delivers the oven-ready trade deal he promised was ready and then answers the questions so many businesses are asking about the future arrangements they need to plan for.
“Businesses desperately need clarity to prepare for the future and at the moment, with less than three months to go, many sectors are not being given the level of detail they need.”
A government spokesman said: “With fewer than three months to go, businesses need to prepare now for new procedures whether or not we reach a trade agreement with the EU, so that they can seize the significant opportunities that lie ahead.
“To help businesses get ready, we have launched a major communications campaign in the UK and EU, committed to investing £705m in jobs, infrastructure and technology at the border and provided a £84m support package to boost the capacity of the customs intermediary sector.”
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