A disorderly no-deal Brexit will drive business to desperate measures
23rd December 2018

It has been 30 months since the referendum on the UK’s membership of the European Union and since then there has been no end to the twists and turns of the process, including stalled negotiations, archaic parliamentary procedures and political plots.

During that time, business communities across the UK have been looking on with frustration and concern – and a growing sense of horror.

Businesses have said again and again that they need clarity on the future to plan, but many of their questions have remained unanswered. Survey after survey has shown that investment and confidence are stalling, with firms understandably reluctant to make big decisions on the future without clarity on what conditions they’ll face.

The prime minister has said from the beginning that no deal is better than a bad deal, yet there’s been a lack of planning and communication to get the country prepared for the possibility of walking away from the EU in March 2019 without a deal. The stark fact is that the government agencies and bodies that would be at the sharp end of a no-deal Brexit will not be in any position to support business and communities through a disorderly exit less than 100 days from now.

While some firms have been able to commit time and money to contingency planning, for the vast majority of small and medium-size enterprises trying to prepare for every possible scenario isn’t a viable option, given constraints on their already tight resources.

Earlier this year, the British Chambers of Commerce released our business risk register, outlining 24 critical questions that businesses need answered to be able to operate in any Brexit scenario. Today, only two areas are marked green, indicating sufficient information for businesses to plan, and 15 are still flashing red where there is little concrete detail.

It wasn’t until this summer that the no-deal technical notices from government began to drip through; even then, most were lacking the level of precision that businesses need to make concrete decisions.

As the political dramas continue, we’re increasingly hearing from BCC members who, because of the lack of clarity, are being forced to make difficult decisions, such as opening warehouses and distribution hubs on the continent, applying to European regulators and setting up legal identities. This means that jobs and investments intended for the UK are being diverted out.

Now the UK’s departure from the EU is fewer than 100 days away and there are still more questions than answers about future trading conditions.

While there is a range of views across BCC business communities about the preferred nature of the future relationship between the UK and EU, there is a clear desire to avoid a messy and disorderly exit.

The immediate impact of no deal would be the lack of a transition period. Having to adjust to an entirely new set of trading conditions in a few short weeks is as improbable as it is impractical.

While Westminster spent December fighting with itself, the UK slid ever closer to the possibility of a disorderly Brexit by default.

The impact of such a disorderly Brexit cannot be overstated. Our research shows that firms will cut investment and recruitment and one-fifth will move part or all of their operations to the EU.

Last week, we joined the other leading business groups in calling on politicians to do everything possible to avoid a disorderly exit on 29 March. A “managed” no deal is not credible in the views of most businesses, given the time remaining. The reality is that leaving without a deal will be chaos for firms on any number of fronts including customs, tariffs, supply chains and recognition of qualifications.

As MPs head home for the holidays, they should consider the real and lasting consequences for their constituencies of such an event and return in the new year with a renewed focus and energy to find a way forward. The future course of many a local business, and of the UK economy as a whole, may depend on it.

Dr Adam Marshall is director general of the British Chambers of Commerce (@BCCAdam)

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