By Lauren Howells.
Almost 1 in 5 UK firms say that the point of no return for triggering their Brexit contingency plans has already passed, according to on business preparations.
If there is no greater certainty on Brexit by December this year, the majority of the businesses surveyed said they will implement “damaging contingency plans”, the CBI’s research revealed. Plans include job cuts, stockpiling goods, adjusting supply chains outside the UK and relocating production and services overseas.
The same survey of 236 firms also revealed that 8 out of 10 businesses feel that Brexit has had a negative effect on investment decisions, with CBI Director-General, Carolyn Fairbairn, warning that the “speed of negotiations is being outpaced by the reality firms are facing on the ground”.
Firms’ “reluctance to invest will have a knock-on effect”
The CBI warned that the reluctance to invest would have a knock-on effect for wages, living standards and jobs, as investment is “a pillar of productivity, where the UK already trails its international peers.”
The survey also revealed that many businesses were now planning for a ‘no-deal’ Brexit, which the CBI said would have “severe implications” for livelihoods both in the UK and on the continent.
Fairbairn said that unless a Withdrawal Agreement was reached by December, firms would “press the button” on their contingency plans, resulting in the loss of jobs and supply chains being moved.
“The knock-on effect for the UK economy would be significant. Living standards would be affected and less money would be available for vital public services including schools, hospitals and housing,” Fairbairn warned.
…“these are grave losses to our economy”
Fairbairn described the situation as “urgent” and cited examples of cancelled projects, including a multinational plastics manufacturer which had cancelled a £7 million investment and a fashion house which had cancelled its £50 million plans for a new factory in the UK.
“Many firms won’t publicise these decisions, yet their impact will show in lower GDP years down the line.”
Fifty-eight per cent of businesses surveyed said they had formulated contingency plans. Thirty per cent of those with contingency plans said that they intended to relocate production and services overseas and 9% of those firms had already carried this out. Forty-four per cent of companies with contingency plans said they intended to stockpile goods.
It was hoped that the UK and the EU would reach a deal last week but again, there was no breakthrough.