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Business must speed up no-deal Brexit plans, says IoD


British businesses have made little progress preparing for Brexit in October in spite of the growing possibility that the UK will leave without a withdrawal agreement with the EU, according to the Institute of Directors.

The business lobby group called on companies to accelerate efforts to prepare for all outcomes for when the UK leaves the EU, saying that businesses “cannot afford to put their faith in politicians to produce a Brexit resolution”.

The IoD’s warning comes after several leading candidates to replace Theresa May as prime minister, including favourite Boris Johnson, said that the UK would leave the EU at the end of October even without any deal in place.

Business leaders have already said that such a hard Brexit could be damaging for companies, with groups such as Make UK, the UK’s manufacturing body, warning that jobs were at risk as a result of uncertainty over the UK’s future relationship with the EU.

The IoD has said that companies need to be prepared for the eventuality of a no-deal Brexit. A survey conducted by the group showed that the proportion of its members that had triggered contingency plans increased slightly between January and April, from 18 to 23 per cent.

But more than half of the members had still not started any contingency planning, and only 4 per cent said they would be using the time until October to accelerate efforts.

“This week’s vote won’t be the last twist in the Brexit saga, but it made clear how real the possibility of no-deal is,” said Edwin Morgan, the IoD’s interim director-general. “Business can have no absolute reassurance that an agreement will be reached, particularly given the commitment of some Conservative leadership candidates to leaving the EU in October with or without a deal. It feels like the extension is at risk of being wasted.”

Some businesses are worried that preparing for a no-deal Brexit will be harder in October than March, when many companies built up supplies out of concern that it would have become difficult to move goods between the UK and the EU.

Tesco on Thursday warned that a no-deal Brexit in October would be more challenging than in March given the retailer’s need to prepare for Halloween and its Christmas peak-trading season. Dave Lewis, chief executive, said at its annual general meeting that it had a £200m stockpile of long-life food products in March but that there would be less space in its warehouses in October.

The IoD was also critical of the government’s lack of support for small businesses in preparing for Brexit. Business leaders have warned that large companies have generally made contingency plans for various Brexit scenarios, but smaller groups are less prepared for a disruptive no-deal withdrawal.

The IoD said there had been “very limited” financial support from government for small businesses to prepare, despite calls for Brexit planning vouchers to pay for professional help in trade and legal issues.

“If businesses can’t have faith in politicians, that means they have to look out for themselves,” Mr Morgan said.



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