Small business will be especially badly hit by no deal, warns CBI

CBI makes 200 recommendations as to how Government and EU can prepare for no deal, with Britain ahead of Europe in emergency preparations

Small and medium-sized firms are especially vulnerable in the even of a no-deal Brexit, the CBI has warned.

Four out of 10 SMEs that trade internationally have no contingency plans for Brexit, says the CBI. Fifty-six per cent of SMEs in Northern Ireland – the pinch point of Brexit negotiations – have yet to start planning. And 90pc of small architecture firms have found it impossible to start planning.

The CBI says that both the UK and the EU are unprepared for Britain crashing out of the EU on October 31, with Brussels surprisingly even less prepared than the UK.

Although businesses have already spent billions on contingency planning for no deal, they remain hampered by unclear advice, times, cost and complexity, says the industry body.

For hundreds of thousands of small companies, diverting precious resource – both human and financial – to Brexit preparedness measures is out of reach, says the CBI. They cannot hope to have access to anything like the in-house advice available to large companies, and government funds that can help them to do so have been poorly advertised and are now closed, says the business lobbyist. Eighty-seven per cent of CBI members have cited a lack of, or inconsistent, information making it difficult to prepare for Brexit, while 41pc cite the cost or the lack of resources as a major concern.

Its report What comes next? The business analysis of no deal preparations makes 200 recommendations on how the Government and the EU can defang the worst unintended consequences of no deal. These include creating additional parliamentary time to complete no-deal legislation, launching a no-deal advisory campaign aimed at SMEs and having the EU issuing temporary trading licences to UK exporters.

Specific recommendations affecting SMEs include:

  • Supporting SMEs to cope with the sudden introduction of tariffs with the extra administrative burden
  • Banks to support businesses with cash flow issues anticipated from no deal
  • Make SMEs aware of the impact of cross-border data flows — the UK is Europe’s market leader in a data-flow market worth over £73bn – suddenly being snapped off.

However, many of its recommendations have already been superseded by Prime Minister Boris Johnson’s new attacking strategy when it comes to no deal planning, such as daily emergency planning meetings reviewing Whitehall progress chaired by Cabinet Office boss Michael Gove, and the launch of what has been described as the biggest public information campaign since the Second World War warning businesses and households about the consequences of no deal.

Josh Hardie, deputy-director general of the CBI, said: “Businesses are desperate to move beyond Brexit. They have huge belief in the UK and getting a deal will open many doors that have been closed by uncertainty. There is a fresh opportunity to show a new spirit of pragmatism and flexibility. Both sides are under prepared, so it’s in all our interests. It cannot be beyond the wit of the continent’s greatest negotiators to find a way through and agree a deal.

“But until this becomes a reality, all must prepare to leave without one. It’s time to review outdated technical notices; launch an ambitious communications campaign for every firm in the country and rigorously test all Government plans and IT systems.

“The EU must come to the table and commit – at the very least – to matching the UK’s sensible mitigations. Failure to do so will hurt all our economies. While the UK’s preparations to date are welcome, the unprecedented nature of Brexit means some aspects cannot be mitigated. We can reduce but not remove the damage of no deal.”

Further reading

Small business exporters shrug of threat of no-deal Brexit

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...

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