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Most businesses have no contingency plans for life after Brexit – survey

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The Government’s plan for Brexit receives only minority support among South West businesses, according to the results of a survey published by Business West as Article 50 is triggered today (Wednesday).

Based on a sample of 419 SMEs in Bristol, Bath, Gloucestershire, Swindon and Wiltshire, the survey provides an exclusive snapshot of South West business sentiment and activity in the immediate run-up to the triggering of Article 50.

The findings show that a majority of businesses (51 percent) view leaving the single market and customs union as ‘negative’ or ‘very negative’.

In contrast, 14 percent and 19 percent respectively view Britain’s potential exit from the customs union and single market as ‘positive’ or ‘very positive’.

The prospect of leaving the single market and customs union is felt particularly keenly by exporters, with a breakdown of the figures uncovering a raft of alarming concerns:

  • Paperwork - 36 percent of respondents and 57 percent of exporters believe the impact will be ‘negative’ or ‘very negative’, compared with 10 percent who think the impact will be ‘positive’ or ‘very positive’
  • Regulation & compliance - 31 percent of respondents and 41 percent of exporters believe the impact will be ‘negative’ or ‘very negative’ in this regard, compared with 15 percent who think it will be ‘positive’ or ‘very positive’
  • Tariffs - 38 percent of respondents and 47 percent of exporters believe the impact on tariffs will be ‘negative’ or ‘very negative’ for their operations, compared with 9% who think the impact will be ‘positive’ or ‘very positive’

Despite a series of Government moves to allay fears that it can deliver a workable deal for businesses, confidence in the Government’s ability to do so declined in the six months to March 2017, with levels of ‘moderate’ to ‘strong’ uncertainty reported by businesses on the rise in some areas.

Notably, exporting businesses report much higher levels of uncertainty than non-exporting businesses do, and this is demonstrated by the fact that uncertainty was rated as ‘moderate’ or ‘strong’ by up to 71 percent of the aforementioned cohort.

The survey also revealed that relatively few (15.4 percent) are taking positive steps to prepare for life after the European Union, even as the formal negotiations get underway.

Some businesses stated that they will feel in a state of limbo until the shape of the United Kingdom’s Brexit deal becomes clearer in mid-2018, pressing the need for greater information and support from the Government in the intervening period.

Others feel that they simply cannot afford to put off making important business and planning decisions any longer due to the timings of negotiations. In rare cases, businesses think that they will be forced into taking even more drastic measures.

Commenting on the survey’s findings, James Monk, international trade director at Business West said: “We fully recognise that South West businesses are finding it incredibly difficult to plan for a future outside of the EU.

“Never has the maxim ‘fail to prepare, prepare to fail’ ever been as relevant to businesses as it is now, and exiting the EU may well have a significant impact on exporters.

“But at the moment the pound is weak and there are limited trade restrictions on trading with Europe, so now would be a good time to start.

“The good news for businesses in the South West is that help and support is on hand from Business West on all aspects of international trade.

“Over the next two years we will continue to work with many government departments – Department for International Trade, HMRC, Department for Exiting the EU – as well as the World Trade Organisation and International Chambers of Commerce.

“In this way we will be able to advise businesses on possible trading scenarios, helping to guide them as information becomes available – sifting the fact from the fake news.”

Among the Wiltshire businesses who responded to the survey, and were happy to be quoted, was Beverley Ford of Chippenham-based Rota Val Ltd, a manufacturer of rotary valves and diverter valves for the solids handling industries, which employs 35 people.

“I feel there will be unnecessary customs burdens imposed even if extra tariffs are not. We will still have to comply with EU regulations demanded by our EU customers,” said Beverley.

“We need to know what added administrative burden are we going to face with exports to EU.”

Meanwhile, Ben Biscoe of Corsham-based Fairyglass Ltd, a wholesale gift manufacturer and distributor with five employees, said: “I think there are opportunities for us once we've left the EU, although overall I'm not in favour of leaving.

“I believe that leaving the customs union is a huge mistake, and one that we won't see the effects of for several years, by which time it will be too late to do anything about it.

“We've been concentrating on our export market for a couple of years now but I think that most of the work we've done will go to waste.

“Our customers in Europe can purchase as easily from our competitors in Europe and the introduction of a tariff system, even with zero tariff payment – just paperwork – means it's far less attractive for a retailer to purchase from a UK source unless our pricing is much more competitive.

“We can't lower our prices more, as we're hit in the UK with more regulatory costs, higher business rates, and far higher import costs.

“All plans regarding export have been put on hold. We're concentrating on expanding our market share in the UK instead while we wait for clarity on EU negotiations.

“We've taken on agents to push our ranges over our competitors, and invested in systems internally and for our customers to use that make working with us simpler.”