Business urged to prepare for Brexit

With less than 100 days to go before the UK leaves the EU, a poll by EY has found only one in nine businesses have a good understanding of the risks of not being prepared, while the business secretary is writing to 600,000 companies urging them to action

EY canvassed the views of over 2,200 international businesses – both UK and international headquartered – to gauge the extent to which businesses had put plans in place to mitigate the risks of trading in a post Brexit world.

Just one in nine have mitigations in place. In contrast, one in six claim they have a good understanding but are simply not ready, while one in four have a poor understanding and have made little attempt to take any actions to prepare.

Sally Jones, EY’s Brexit strategy and trade leader, said: ‘Whether businesses’ lack of Brexit preparedness is a result of crisis fatigue, inertia, too little information, or complacency, the results are really concerning.

‘With under 100 days to go until the UK leaves the EU there is little time to focus efforts and resource on the parts of their operations that are business critical.’

Over half (55%) of those polled said that customs and supply chain are likely to be the areas of their operations most impacted by Brexit (55%), while regulatory and legal aspects were way down the list of concerns, accounting for just over one-fifth (23%) of respondents.

Jones indicated this focus needed to shift, saying: ‘In a worst-case scenario, if businesses haven’t quite got their ducks in a row with customs, they may see additional costs and time delays to their operations post Brexit.

‘However, if they fail to prepare from a regulatory and legal point of view, for example don’t have the necessary regulatory presence or authorisations to sell their products in an EU country, they won’t be able to trade at all and the consequences will be far worse.’

Covid-19 had impacted their Brexit preparations in some way for 55% of respondents, with EY identifying four key reasons.

Brexit committees had either been disbanded to focus on other more pressing concerns or personnel had been furloughed; stockpiles in anticipation of Brexit disruption had been burnt through in March when the UK’s supply chains came under intense pressure; cash reserves are so light as a result of the pandemic that there are no funds to rebuild stockpiles; and some businesses had to fundamentally change their supply lines at break-neck speed as trusted trade routes were closed or delayed following the outbreak of Covid-19.

Jones warned: ‘Companies that have managed and survived the impact of COVID-19 can’t allow their lack of Brexit preparedness to be the final straw that breaks the camel’s back.’

Separately, business secretary Alok Sharma is to write to over 600,000 companies this week urging them to prepare for the end of the transition period and warning they need to take action now to be ready on 1 January 2021.

In his letter, the Business Secretary will call on businesses to familiarise themselves with the actions they will need to take, by visiting and using the checker tool.

The letter points out that the vast majority of these actions will need to be completed regardless of the outcome of the UK’s negotiations with the EU. These include ensuring staff register for residency rights and preparing for customs procedures when trading with the EU.

To make sure businesses are prepared, the government will also host a series of sector-specific webinars throughout October to remind them of the changes they will need to make.

Sharma said: ‘With just 81 days until the end of the transition period, businesses must act now to ensure they are ready for the UK’s new start come January. There will be no extension to the transition period, so there is no time to waste.

‘I urge all businesses across the country to check to see what action they need to take, sign up for updates, or attend one of our sector-specific webinars.’

The webinars cover general areas that businesses of any shape and size will need to understand and act on, such as visas, work permits, and tariffs – as well as information tailored to particular industries.

Useful links:

BEIS webinar details

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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