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Covid would magnify no-deal impact for business

16 Oct 2020

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Business leaders fear a potential double hit from Covid and no deal, new figures from the Institute of Directors reveal.

In a survey of almost a thousand company directors conducted in late September, the majority said that the pandemic would magnify the impact of a no-deal Brexit on their organisation, while less than 1 in 10 thought the reverse.

Just under half of respondents indicated they weren’t yet fully prepared for the end of the transition period, with nearly a quarter of respondents reporting that their company may not be ready in time. Over a fifth of those polled said they were fully prepared, with 28% reporting they didn’t expect Brexit to affect their organisation.

Some of the most common actions taken to prepare for Brexit included building up cash reserves, which over a third of respondents had already done. Stockpiling could be set to rise, as 12% said they intended to do so. Concerningly, many firms still needed to obtain EU licences and authorisations.

The IoD urged both sides of the negotiations to work constructively towards a deal, and called on the UK Government to consider fiscal support to aid small firms' Brexit adjustment. A phased implementation of changes would also help businesses to adapt.

Allie Renison, Senior Policy Advisor 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. 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."

Full results: 

958 respondents, conducted between 11-30 September 2020

Thinking with your organisation in mind, do you think the impact of coronavirus would affect the impact of a no-deal outcome between the UK and EU?  

The impact of coronavirus will exacerbate/magnify a no-deal outcome

54%

The impact of coronavirus will mitigate the effect of a no-deal outcome

9%

No impact either way

30%

Don't know

7%

 

Have you already undertaken, or plan to undertake, any of the following contingency measures?

 

Already undertaken

Plan to

Not planning to

Stockpile goods/products/parts

15%

12%

73%

Build up cash reserves

37%

13%

50%

Relocate or open up operations in the EU for trade/customer/client servicing continuity

16%

8%

75%

Secure additional warehousing space

5%

3%

92%

Have a customs agent or other related intermediary

12%

7%

81%

Obtain necessary licences/authorisations from EU/European authorities

14%

14%

73%

Reorient/adjust my supply chain

12%

9%

79%

Stopped sourcing/buying from the EU

5%

3%

93%

Stopped selling to the EU

3%

2%

95%

Our organisation has been cut out of EU or UK supply chains

3%

1%

96%

Close the UK part of our business

1%

3%

96%

Transfer staff to the EU

4%

5%

91%

Transfer staff to the UK

1%

1%

98%

Open new location/business in the UK

2%

2%

96%


Which of the following statement best matches your organisation's preparedness for the end of the Brexit transition period on 31 December 2020?   

Fully prepared

21%

More preparation to do - we will be prepared by the end of the year

21%

More preparation to do - not sure if we will be prepared by the end of the year

24%

Brexit will not affect our organisation

28%

Don't know

7%

Coronavirus Hub - IoD

Contact Press Office

Euan Holmes, Press Officer

020 7451 3280


Press office