-
80% of companies say Brexit has had
negative impact on investment decisions
-
39% of companies to trigger further
contingency plans if no clarity by November, with another 24%
triggering by December
-
19% say deadline for stopping
implementation of plans has already
passed
Eight out of ten firms say Brexit has had a negative
effect on investment decisions, according to new CBI research on
business preparations.
A survey of 236 firms, representing 101 large
companies and 135 SMEs, also revealed the majority will implement
damaging contingency plans in the absence of greater certainty on
Brexit by December.
Carolyn Fairbairn, CBI Director-General, warns
‘the speed of negotiations is being outpaced
by the reality firms are facing on the
ground’.And almost 1 in 5 firms say the point of
no return for triggering their plans has already
passed.
Contingency plans include cutting jobs, adjusting
supply chains outside the UK, stockpiling goods and relocating
production and services overseas.
Businesses’ reluctance to invest will have a knock-on
effect for jobs, wages and living standards. Investment is a
pillar of productivity, where the UK already trails its
international peers.
Many firms are now planning for a ‘no deal’
scenario, the survey adds, with severe implications for
people’s livelihoods on both sides of the Channel.
Carolyn Fairbairn, CBI Director-General,
said:
“The situation is now urgent. The speed
of negotiations is being outpaced by the reality firms are facing
on the ground.
“Unless a Withdrawal Agreement is
locked down by December, firms will press the button on their
contingency plans. Jobs will be lost and supply chains
moved.
“The knock-on effect for the UK economy
would be significant. Living standards would be affected and less
money would be available for vital public services including
schools, hospitals and housing.
“Uncertainty is draining investment from the UK, with
Brexit having a negative impact on 8 in 10 businesses. From a
multinational plastics manufacturer which has cancelled a £7
million investment, to a fashion house shelving £50 million plans
for a new UK factory, these are grave losses to our
economy.
“Many firms won’t publicise these decisions, yet
their impact will show in lower GDP years down the
line.
“As long as ‘no deal’ remains a possibility, the
effect is corrosive for the UK economy, jobs and
communities.
“Businesses have displayed remarkable resilience
since the Referendum, but patience is now threadbare. Negotiators
must secure the Withdrawal Agreement before December to unlock a
transition period. The message to politicians on all sides is:
‘your actions will echo through generations’.”
Other key statistics from the survey
include:
On contingency plans:
-
58% of businesses surveyed have formulated
contingency plans. 41% of businesses surveyed have carried out
some of those contingency plans. Only 2% of businesses surveyed
have carried out all of their contingency
plans.
-
56% of businesses with contingency plans intend to
adjust their supply chains outside the UK, and 20% of those
have already carried these out.
-
44% of businesses with contingency plans intend to
stockpile goods, 15% have already carried these
out.
-
30% of businesses with contingency
plans intend to relocate production and services overseas,
9% have already carried these out.
-
15% of companies with contingency plans intend to
move jobs, 3% have already carried these out.
On contingency planning
timelines:
-
For 19% of businesses surveyed, the latest date to
halt further implementation of contingency plans has already
passed.
-
For 15% of businesses surveyed, the latest date to
halt further implementation of contingency plans is October
2018.
-
For 24% of businesses surveyed, the latest date to
halt further implementation of contingency plans is November
2018.
-
For 24% of businesses surveyed, the latest date to
halt further implementation of contingency plans is December
2018.
On investment:
-
80% of businesses say Brexit has had a negative
impact on their investment decisions, up from 36% in October
2017.
-
66% of businesses also said Brexit has had an
impact on the attractiveness of the UK as a place to invest.
24% said no impact. 10% don’t know.
On Brexit opportunities:
-
30% of businesses have investigated the
opportunities for business growth that may arise out of Brexit
but have not found any.
-
20% of businesses have found some opportunities for
business growth that may arise out of Brexit. Of those, 33% of
businesses identified disruption to existing markets as
providing an opportunity in relation to Brexit.
-
21% of businesses said they wanted to look for
opportunities but were unable to because they did not know what
form Brexit would take.
-
28% have not looked for opportunities, but more
than half of those intend to.
21 October 2018
Notes to Editors:
The survey was carried out between 19 September
and 8 October.
‘Large companies’ denotes those with more than
500 employees. ‘SMEs’ denotes those with 1-500
employees.
The CBI conducted its first Brexit
preparedness survey in
October last year.
