Less than a third (28 per cent) of UK businesses have started planning for the UK's departure from the European Union and the majority remain in early stage development, while 18 per cent have assessed and identified the risks and opportunities of Brexit, according to research by Grant Thornton. The research found that the majority of mid-sized businesses in the European Union, including the UK, have done no planning at all or believe they don’t need to plan, ahead of the March 2019 Brexit deadline. In the UK, 22 per cent of businesses have done no planning whatsoever, and a further 42 per cent believe they don’t need a plan for Brexit and only 9 per cent are currently implementing their contingency plans, and a further 1 per cent have developed a contingency plan which they have yet to implement.
Businesses within the European Union remain even more unready for Britain’s impending departure, with 27 per cent having done no planning and 62 per cent believing their business does not need a plan. Of the EU businesses who are preparing for Brexit, only 4 per cent have conducted risk assessments and 1 per cent developed contingency plans.
In Ireland, the only country with a UK land border, businesses are more prepared for Brexit, with half of Irish businesses surveyed having carried out risk assessments and 12 per cent actively implementing contingency plans. Only 10 per cent of Irish businesses felt they did not need a plan or had done no planning at all.
FX hedging and working capital must be reviewed before Brexit
Grant Thornton's Robert Hannah commented: “Two years on from Britain’s historic vote to leave the European Union, businesses on both sides of the debate seem largely complacent over the transformative impact Britain’s EU departure will have. Whilst the number of unknowns and uncertainty at a policy level remain a hindrance for planning in absolute terms, businesses cannot be complacent and need to consider how their operations will be affected ahead of the March 2019 deadline and into the potential transition period. Even in the absence of clarity on Britain’s future relationship with the EU at a political level, there are a number of actions within businesses’ gift to consider now in order to stand them in good stead post-Brexit. This can include a number of scenario forecasts and mitigating actions, such as reviewing forex hedging and working capital requirements to ensure they have the right talent and capabilities to manage exports and customs functions.”
The research also found that:
- The majority of businesses who have conducted some degree of planning are mostly factoring in an ultimate ‘No Deal’ scenario, whereby the UK and EU fail to reach an agreement and the UK defaults to trading on WTO terms.
- More than half of UK businesses (56 per cent) and 48 per cent of EU businesses have included a ‘No Deal’ scenario in their plans.
- Ireland again stands out in this regard, with two-thirds (67 per cent) of its businesses who have started planning having considered a ‘No Deal’ reality.
- Over a quarter (28 per cent) of UK businesses expressed a degree of confidence in the UK and EU agreeing an outcome that is ultimately positive for their business, yet more businesses (31 per cent) were not confident.
- EU businesses, on the other hand, were more confident that an outcome would be reached in their favour, with 34 per cent confident and only 20 per cent unconfident.
- Ireland, however, remains an outlier amongst EU businesses, with only 12 per cent reporting confidence in a positive outcome and more than half (52 per cent) were apprehensive that the outcome would have a positive impact on their business.
- The majority, across both the UK and EU, remained largely unsure (42 per cent and 46 per cent, respectively).
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