What would Brexit delay mean for UK business contingency planning?

Analysis: There is huge variation in the amount of preparation already undertaken by UK firms ahead of EU withdrawal, as James Moore explains

Pulling their socks up? Not all companies are prepared for the worst (AFP/Getty)

With a week to go, the prime minister has finally sought to delay Brexit. As things stand, however, there is no formal agreement between the government and the EU about the length of any Article 50 extension.

So, what would a Brexit delay do to individual businesses in terms of contingency planning?

Not much, is the answer.

One thing to understand is that a lot of businesses simply haven’t done any.

When the Institute of Directors (IoD) looked at this question earlier in the year it found 40 per cent of its members had taken no steps at all to prepare for a sudden no-deal situation.

That may seem like extraordinary complacency, given the wretched state of a UK government led by arguably the worst prime minister in history. And in some cases, that’s probably true. (There is still the feeling that “it just won’t happen” in some quarters.)

But there is a much larger slate of smaller firms that simply lack the resources to be able to plan effectively for the looming earthquake.

We’re just over a week away from the notional exit date and it’s still the case that no one really has the faintest idea how (or when) this will end, and what the impact will be. That being the case, small firms have opted to take a wait and see approach. They will react to what emerges, because they don’t have much of a choice.

The IoD, and the Scottish National Party, have called for businesses to be issued with prep vouchers, along the lines of the schemes the Irish and Dutch governments have put into operation.

These, the IoD says, could persuade some to act in the event of a short delay by incentivising them to take preparatory measures.

Whatever is agreed, those businesses that are prepping will continue to do so. Those that aren’t will carry on crossing their fingers

But that looks unlikely at present. For a start, the EU doesn’t seem minded to agree to a short extension; and such a scheme would be an example of something the current government seems allergic to: forward-thinking policy-making.

Suren Thiru, from the British Chambers of Commerce, says those that have been preparing for no deal will continue to do so if a delay is secured. That means a continuation of the weak investment that is slowing the UK economy to a crawl as resources are diverted to emergency planning.

The problem for all businesses, as he points out, is that there are just “so many key questions to which we don’t have answers”. How will trade work, how will customs work, how will firms lay their hands on the staff they need?

The prospect of a “rolling”, non-date-specific delay fills businesses with almost as much horror as no deal (which most regard as the equivalent of Hereditary, The Exorcist and Children of the Corn all merged into one).

So whatever is agreed, those businesses that are prepping will keep doing so. Those that aren’t will carry on crossing their fingers in the hope of Westminster coming to its senses.

They’d probably best cross their toes, and anything else they can lay their hands on while they’re at it.

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