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."
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
The impact of coronavirus will mitigate the effect of a no-deal outcome
No impact either way
Have you already undertaken, or plan to undertake, any of the following contingency measures?
Not planning to
Build up cash reserves
Relocate or open up operations in the EU for trade/customer/client servicing continuity
Secure additional warehousing space
Have a customs agent or other related intermediary
Obtain necessary licences/authorisations from EU/European authorities
Reorient/adjust my supply chain
Stopped sourcing/buying from the EU
Stopped selling to the EU
Our organisation has been cut out of EU or UK supply chains
Close the UK part of our business
Transfer staff to the EU
Transfer staff to the UK
Open new location/business in the UK
Which of the following statement best matches your organisation's preparedness for the end of the Brexit transition period on 31 December 2020?
More preparation to do - we will be prepared by the end of the year
More preparation to do - not sure if we will be prepared by the end of the year
Brexit will not affect our organisation