Nearly a third of firms looking overseas due to Brexit
New figures from the Institute of Directors show that nearly one in three (29%) members could be forced to shift operations abroad due to Brexit. A survey of over 1,200 company directors found that 16% had already pressed the button on relocation plans or were planning to in connection with Brexit, while a further 13% are actively considering doing so.
The trend was not restricted to big business. While more large companies had already moved operations, small firms were almost twice as likely to be now actively considering the prospect.
Two-thirds of IoD members export to the EU, of whom 40% were looking to relocate overseas, and 4 in 10 IoD members who are engaged with contingency planning have explored moving operations. The EU was by far the most commonly-identified destination for firms looking to move or set up operations abroad to deal with Brexit.
Edwin Morgan, Interim Director General of the Institute of Directors, said:
“It brings no pleasure to reveal these worrying signs, but we can no more ignore the real consequences of delay and confusion than business leaders can ignore the hard choices that they face in protecting their companies. Change is a necessary and often positive part of doing business, but the unavoidable disruption and increased trade barriers that no-deal would bring are entirely unproductive.
“While the actions of big companies have been making headlines, these figures suggest that smaller enterprises are increasingly considering taking the serious step of moving some operations abroad. For these firms, typically with tighter resources, to be thinking about such a costly course of action makes clear the precarious position they are in.
“We still have a chance to stem the flow, and provide enough certainty to the firms that are considering moving but haven’t yet done so. The UK’s hard-won reputation as a stable, predictable environment for enterprise is being chipped away. Our political leaders must keep this in the front of their minds as we enter this critical phase of negotiations.”
Full survey results:
1202 respondents, conducted between 17-19 January 2019
Has Brexit led or will it lead to your organisation moving/setting up operations outside of the UK?
Where are you moving/setting up operations outside of the UK, or considering doing so, in connection with Brexit?
What is your organisation’s approach to Brexit contingency planning?
Has Brexit led or will it lead to your organisation moving/setting up operations outside of the UK? (selected sectors)
*Size categories used: Small (<50 employees), Medium (50-250 employees), Large (>250 employees).
- 34% of those selling goods only are considering relocating or have done so already. This figure is lower (27%) for those selling services only, but around the same (33%) for those selling both goods and services. Financial services are particularly likely to have already activated contingency plans to relocate.
- 64% of IoD members export to the EU, while 51% import from the bloc for business purposes (trading in either goods or services). Both these groups are more likely to be looking at relocating – 40% of exporters, and 39% of importers.
- There is only a six percentage point differential between the proportion of small and large firms looking at relocation (27% of small firms versus 33% of larger ones).
- 40% of IoD members are engaged with Brexit contingency planning generally (activated, drawn up or intending to make plans). 42% of these are looking into relocating (just under half of whom have already moved operations).
- Of the 18% of IoD members who have already activated contingency plans, nearly half (48%) are looking at relocating (34% have already done so, 6% plan to and 8% are actively considering it).
- Of the 18% of IoD members who have drawn up but not yet implemented contingency plans, 39% are looking at relocation (10%/13%/16%)