Out-Law News | 27 Mar 2018 | 9:52 am | 1 min. read
With Brexit date just one year away on 29 March 2019, Pinsent Masons, the law firm behind Out-Law.com, asked board members and general counsel at FTSE 100, FTSE 250 and private unlisted companies of equivalent size about their business' preparations for Brexit.
That research found that 51% of major UK businesses have started acting on plans that assume that the UK and EU will not agree on the terms of a future trade deal prior to the UK leaving the EU and that there will be no agreement either on transitional trade arrangements applicable from the point of Brexit.
The Pinsent Masons report outlining the survey findings also revealed that a further 40% of the companies intend to trigger their contingency plans before the end of the 2018 if no trade deal or transitional arrangements have been struck between the UK and EU by that time.
Pinsent Masons Brexit expert Guy Lougher said that the reason 91% of businesses surveyed expect to have triggered Brexit contingency plans for a no-deal scenario by the end of this year is not necessarily because they foresee a worst-case scenario outcome from EU-UK negotiations.
He said it is "because businesses of this size and scale cannot afford to wait for clarity on the final shape of the UK's post-EU status".
"Despite the announcement that the UK and EU have agreed a large part of the withdrawal agreement in principle, this will not become legal certainty until the final agreement is ratified," Lougher said.
"In some sectors, with financial services and other highly regulated sectors being obvious examples, businesses are being warned by their sector regulators to act early. For other businesses, the lead times are sufficiently long to mean that Brexit-related actions, for example switching some operations and/or staff to another EU country, cannot be left until later in the day. In either case, delaying action is not a feasible strategy," he said.
The survey results also revealed the wide range of contingency plans that the UK's biggest companies have drawn up.
According to the research, 35% of board executives, and 39% of general counsel, said they expect non-UK subsidiaries operated at the moment to switch to EU-based suppliers and away from those based in the UK as a result of Brexit.
Almost a quarter of boards (23%) also expect to reduce their investment in the UK as a consequence of Brexit, while Brexit is expected to result in jobs or operations being moved out of the UK by 15% and 14% of executives respectively, the report said.
However, 23% of the boardroom executives said they anticipate switching to UK-based suppliers as a result of Brexit.