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East Midlands Chamber News

East Midlands businesses unprepared for Brexit

Research by Grant Thornton in the East Midlands has found that almost a third of the region’s medium-sized businesses continue to be concerned about the outcome and impact of Brexit.


Not only are local firms worried about Brexit, mid-sized businesses throughout the European Union also admit to being unprepared for it, according to new research by the firm.


Grant Thornton’s International Business Report (IBR) found that 22% of UK businesses have done no planning whatsoever for Brexit, and a further 42% believe they don’t need a plan.


“Grant Thornton’s new International Business Report (IBR) finds that the majority of mid-sized businesses in the European Union, including the UK, have done no planning, or believe they don’t need any plans, ahead of the March 2019 deadline for Britain’s departure from the European Union,” said Chris Frostwick, practice leader at the firm’s East Midlands regional office.


“Of the 28% which have started planning, the majority remain in early stage development, with 18% having assessed and identified the risks and opportunities of Brexit. Only 9% are currently implementing their contingency plans, and a further 1% have developed a contingency plan which they have yet to implement.”


While Grant Thornton’s East Midlands’ survey uncovered uncertainty over Brexit here in the region, it also reveals a generally positive attitude among regional firms, including plans for future growth.


“Uncertainty over Brexit continues here in the East Midlands, but despite this, our survey found that businesses are looking to invest in their expansion, and even looking beyond domestic markets, with plans to increase export activity,” said Chris.


“Our region’s businesses are certainly getting on and making positive decisions, and in the main, looking forward with optimism. The East Midlands continues to perform strongly for business growth, particularly when compared to the rest of the UK, with many saying they are focused on sustaining growth, with plans to create jobs, hire people and invest in technology to drive and deliver this.


“All of this bodes well for the overall future growth and prosperity of the region.”


According to the survey, mid-sized businesses within the European Union remain even more unready for Britain’s iminent departure, with 27% having done no planning and 62% believing their business does not need a plan. Of the EU businesses that are preparing for Brexit, only 4% have conducted risk assessments and 1% developed contingency plans, with a similar figure having implemented their contingency plans.


The research also finds that the majority of businesses that have conducted some degree of planning are mostly factoring in an ultimate ‘no deal’ scenario, where the UK and EU fail to reach an agreement and the UK defaults to trading on WTO terms.


More than half of UK businesses (56%) and 48% of EU businesses have included a ‘no deal’ scenario in their plans. Ireland again stands out in this regard, with two-thirds (67%) of its businesses that have started planning having considered a ‘no deal’ reality.


“Irrespective of how the negotiation process develops over coming months, the EU economies will remain important trading partners for many regional firms for the foreseeable future,” added Chris.


“It therefore remains important that businesses take a long, hard look at their operations and identify where they’re potentially exposed come March 2019. As with any transformative shift to the economy, Brexit offers both opportunities and risks to business. Taking a more pragmatic approach to planning for Brexit could help identify areas of low risk exposure, helping narrow uncertainty and allow businesses to focus on what really matters.”