As Brexit text is agreed, businesses warn they cannot afford no-deal

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Huge Brexit news this afternoon and evening as UK and EU officials confirmed that they have agreed a draft Brexit ‘text’. Talks between Theresa May and her cabinet members have been held today before further discussions tomorrow afternoon.

The news saw the pound surge against the dollar and the euro, though the cabinet and then Parliament itself must agree on the deal – the technical details of which only a handful of government ministers are yet to have seen.

But this draft Brexit agreement may have arrived just in the nick of time not just for the negotiating schedule and Theresa May but also UK businesses, for which confidence has been seriously waining over the last 12 months in particular.

Read more: SME firms suffering crisis of confidence

Numerous reports and companies themselves have confirmed that they’re delaying investment until the future is clearer, with recruitment levels dropping back too. In fact, it was only today that the latest ONS figures indicated the first decline in employment levels this year with those out of work rising by 21,000 to 1.38 million.

That’s despite hundreds of businesses saying there’s now a serious shortage of migrant workers in the UK and vacancies are becoming harder to fill. Gerwyn Davies of CIPD who conducted the research said that: “The data implies that the pendulum has swung away from the UK as an attractive place to live and work for non-UK-born citizens, especially non-EU citizens, during a period of strong employment growth and low unemployment.

“This has heightened recruitment difficulties for some employers.”

Yet, whilst a draft text has been confirmed, the Prime Minister still faces what is likely to be an even bigger hurdle in these negotiations – opposition parties and Brexiteers within her own party, many of which have been quick to jump in front of cameras this evening to lay their positions and likelihood of voting against whatever the draft agreement may be.

In reality, a deal is within the grasps of Number 10, but no-deal is still a real possibility if what’s on the table as the cabinet meets tomorrow afternoon fails to satisfy anyone in the room.

But businesses say they cannot afford a no-deal scenario. Firms, including the owner of Oxo, Bisto and Mr Kipling, have already started to stockpile ingredients and supplies in case of no-deal and gridlock at UK ports.

Other businesses are calling for the government to put in place similar private sector bail-out plans to that of the 2008 economic crash to avoid wide-scale bankruptcies.

The IoD’s Allie Renison said: “As long as it remains government policy to potentially walk away, it is incumbent on them to make further provision to help firms be fully ready for the consequences of that outcome.”

Read more: Have UK manufacturers already lost out because of Brexit?

And one of those provisions, according to the chief executive of the Food and Drink Federation, Iain Wright, should be government bailouts of private companies.

He said in an interview with Politico that: “If the UK does fall over the Brexit cliff edge, ministers must leverage the government’s financial muscle … in rather the way they did for the banks during the crash.

“If the government was to say no now there would be a very big question from British industry: ‘You were prepared to fund the banks who brought the crisis on themselves… but you’re not prepared to support British business which is completely innocent of any fault in the current circumstances?’”

Some have already started preparing to support businesses within their umbrella who may need support. RBS has put aside £2 billion to support SMEs through Brexit if required.

But with the IoD reporting that just one-third of its 30,000 members have contingency plans in place should there be a hard or cliff-edge Brexit, it is still paramount that businesses take it upon themselves to ensure they’re ready and prepared for any eventuality – however close to midnight the Brexit clock strikes.

If your firm is yet to put in place actionable Brexit plans and procedures and you rely on export sales or import supply, find out how we can help right here.

The Brexit saga continues…

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