Few firms ready for no-deal Brexit, says CBI

Three-quarters of British businesses are worried about the likely economic shock if the UK and European Union fail to reach a Brexit trade deal, a new survey has shown.

David Sapsted

31 July 2020

Friday's report from the Confederation of British Industry (CBI), based on a survey of 752 firms, also highlighted a lack of preparedness among many businesses for a no-deal exit when the current transition period expires at the end of the year.Publication of the survey coincided with an announcement by French bank BNP Paribas that it was creating 400 jobs in continental Europe because of the likelihood its British operation will be unable to operate within the EU after December 31.A stalemate over future arrangements for financial services, along with disagreements over fisheries policy and state aid, are the main stumbling blocks in the continuing discussions between the UK and EU over a post-Brexit deal.Conducted between June 25 and July 15, the CBI survey found that a third of companies said they were very concerned about the economic fallout from a no-deal Brexit, while a further 42 per cent expressed 'moderate' concern.The survey also revealed that business preparations for the end of the transition period have either stalled or gone backwards into reverse since January. Only 15 per cent of companies said they had stepped up preparations in the first half of the year with 21 per cent admitting their plans had gone into reverse, mainly as a result of the coronavirus pandemic.Dame Carolyn Fairbairn, CBI director-general, said: "Recent progress shows what’s possible in these vital negotiations, despite the challenge of the pandemic. An ambitious deal with the EU is essential to shield firms from a further trade shock at a time when they are least equipped to cope."What’s clear from this wide-ranging survey is that the majority of firms have neither the time nor resources to prepare for a non-negotiated EU exit.“While many larger firms have long had plans in place for a no-deal outcome, smaller firms will struggle to cope with a double dose of disruption. The same is true across the Channel, with EU companies’ preparations also hit hard by the pandemic.“Businesses on both sides are desperate for a deal that protects their economies at this most precarious of times. “A deal that supports the UK’s world leading services firms and keeps UK exporters free from red tape, costs and new trade barriers is paramount as the UK takes its all-important steps towards recovery.”Meanwhile, BNP Paribas announced on Friday that it was creating hundreds of jobs in the EU because of Brexit, adding that it had also taken all the necessary regulatory steps to continue to operate in the UK after the end of the year.The bank did not say how the new jobs - 160 in the front office and 240 in support functions - would impact on UK jobs and whether or not relocations would be required. There was also no indication where the new positions would be based.“Selling financial services from the UK to EU clients will not be allowed,” the bank said in a statement. “In the UK, the front office roles, mainly sales positions, and their associated set-up positions are impacted by these measures."