UK Government says that businesses are under-prepared for no-deal Brexit impacts
- Published: Wednesday, 27 February 2019 10:52
The UK Government has published a new document which highlights some of the expected impacts of a no-deal Brexit on businesses, it concludes that 'lack of preparation by businesses and individuals is likely to add to the disruption experienced in a no-deal scenario.'
Entitled 'Implications for business and trade of a no deal exit on 29 March 2019', the document summarises Government activity to prepare for no deal as a contingency plan, and provides an assessment of the implications of a no deal exit for trade and for businesses, given the preparations that have been made.
Some of the highlights from the document include:
- There have been delays to Government no-deal preparations, which are 'partly due to communications to third parties, including many businesses, not having the intended effect, and also because the acceleration of preparedness
since December is not yet bringing delivery of these preparations back on track where there has been prior slippage.'
- Despite communications from the Government, there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low.
- The unilateral contingency measures the EU has announced 'do mitigate some of the most acute immediate impacts, for example on aviation, road haulage, financial services and potentially citizens’ rights' however 'the EU has stressed ... that the mitigations it is putting in place are only temporary, and some important gaps remain...'
- Despite the Government’s efforts to prepare for a no deal, a no deal scenario would have a range of significant impacts for the UK. The Government’s worst case planning assumption is that, 'as a result of French checks and lack of businesses readiness, the flow of goods through the Short Channel Crossings (Dover and Eurotunnel) could be very significantly reduced for months'. However, 'French willingness to facilitate cross-border flows means that the Government does not currently expect ‘day one’ disruption to be at the most severe end of its planning assumptions'.
- The cumulative impact from a ‘no deal’ scenario is expected to be more severe in Northern Ireland than in Great Britain, and to last for longer.
- 'The service sector (which makes up around 80 percent of UK GDP) is supported by free movement of people and a range of cross-cutting regulation such as mutual recognition of qualifications. In a no deal scenario, UK businesses would be treated
as third-country service providers by the EU. The UK would risk a loss of market access and increase in non-tariff barriers. UK businesses would face barriers to establishment and service provisions in the EU which they had not previously faced, including nationality requirements, mobility, recognition of qualifications and regulatory barriers when setting up subsidiaries in EU member states.'
- 'Government has been accelerating its preparations for a no deal scenario since September, with a particular emphasis since December 2018. However, the short time remaining before 29 March 2019 does not allow Government to unilaterally
mitigate the effects of no deal. Even where it can take unilateral action, the lack of preparation by businesses and individuals is likely to add to the disruption experienced in a no deal scenario'.
Read the document (PDF).