Only 26% of UK businesses are fully prepared for Brexit

Concern over UK companies’ Brexit preparedness remain high as a survey finds just over a quarter of businesses polled said they are ready.

A study published by the Institute of Directors (IoD) on Wednesday said its survey found only 26% of UK business leaders are fully prepared to leave the European Union on 31 December.

It also found that 29% of the almost 1,000 company directors surveyed weren’t sure they would be ready by the end of the year and 57% said their ability to be ready was somewhat or entirely dependent on the negotiations.

“Right now, Brexit is a moving target for directors,” said Jonathan Geldart, director general of the IoD. “Trying to prepare, while dealing with the impacts of the pandemic, is a tall order.”

Sterling momentarily jumped on Tuesday after UK cabinet minister Michael Gove confirmed the government would drop controversial legislation that would break the Brexit withdrawal deal.

The EU-UK Joint Committee announced it has agreed “in principle” on all issues relating to the Brexit withdrawal agreement, including border control posts/entry points and customs declarations. Both sides have also reached an agreement in principle on further decisions the joint committee has to take before 1 January 2021.

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Getting a deal done is “still crucial” added Geldart. “It will put organisations on both sides on much better footing, for the short-term and the long-term. No-deal would hamper the recovery business leaders want to fuel in the new year.”

Despite a desire for a deal by both sides, disagreements have remained on three critical issues over the past few months of negotiations, namely, the level-playing field, governance and fisheries.

As a result, the pound has also been swinging rapidly against the dollar (GBPUSD=X) and the euro (GBPEUR=X).

“The IoD has long championed the need for a pragmatic approach to Brexit, centred around giving firms time and fiscal support to prepare and adjust,” said Geldart. “The impact of coronavirus makes these all the more pressing, but we’re running out of road. Businesses don't want to start this new chapter with one hand tied behind their back."

Analysts say Brexit will continue to dominate European markets, contributing to setting “the tone for the last few weeks of 2020 and the first part of 2021,” according Russ Mould, AJ Bell investment director.

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