Business groups admit many companies ill-prepared for no-deal Brexit
Business groups have admitted many companies are ill-prepared for a no-deal Brexit on October 31, confirming a leaked government document that “EU Exit fatigue” has set in after two delays to the UK’s departure.
The potential aftershocks of a no-deal Brexit were laid bare in confidential details of Operation Yellowhammer, the government’s no-deal contingency planning for a no deal departure. The warnings included three months of chaos at ports, shortages of fuel and food, nationwide unrest and a hard border on the island of Ireland.
According to the Yellowhammer document published in the Sunday Times, the government said not all companies were countering the no-deal risks. “In general, large businesses that work across sectors are likely to have better developed counting [SIC]plans than small and medium-size businesses,” the paper said. “Business readiness will be compounded by seasonal effects and factors such as warehouse availability.”
Michael Gove, the minister in charge of no-deal preparations, said on Sunday that “there will be bumps in the road” and “some element of disruption” if the UK leaves without a deal on October 31.
But he insisted the document represented only the “very, very worst situation” and was out of date. He added that Boris Johnson had ramped up preparations for a no-deal Brexit and the government was better prepared for the worst-case scenario.
But representatives of the UK’s business lobby groups told the Financial Times that the leaked document’s assessment of business preparedness for a no-deal Brexit was correct, especially for smaller companies. They blamed a lack of clarity and financial assistance from the government.
Edwin Morgan, interim director-general of the Institute of Directors, said businesses across the economy were “seriously underprepared” for no deal, with smaller businesses especially facing “unknown unknowns”.
“Until recently the level of planning has been fairly low. Our surveys show that businesses had been waiting to see what happened. The message from the government is getting clearer, but is still not clear enough.
“No deal wasn’t the official policy and still technically isn’t.”
Mr Morgan added that the government “still doesn’t talk the language of smaller businesses”. “There’s been no financial support and little accessible information,” he said.
Mike Cherry, chairman of the Federation of Small Businesses, said that smaller firms mostly did not have the resources to plan for no-deal. “The ongoing political uncertainty has meant it’s impossible for them to invest, expand and hire when we don’t know what the future holds,” he said.
A spokesperson for the CBI said that while businesses of all sizes were doing “what they can to prepare” for October 31, “they remain hampered by unclear advice, timelines and costs.”
“While the UK’s preparations to date are welcome, the unprecedented nature of Brexit means some aspects cannot be mitigated. We can reduce but not remove the damage of no-deal. So the government must put as much effort into getting a deal as preparing to leave without one,” the individual said.
Ben Fletcher, executive director of communication, government and policy at Make UK, the manufacturers’ trade organisation, agreed with the Yellowhammer assessment that a no-deal on October 31 would be more challenging than the previous departure date of March 29 due to warehousing demands ahead of the Christmas season.
“In the autumn, it’s the peak period of demand?.?.?.?manufacturers in the food and drink arena [AND]the chemicals and pharmaceuticals sector, they often need chilled warehousing and that’s almost pretty much all block-booked out years in advance by supermarkets.”
Officials also told the Financial Times that the government intended to publish new assessments of the measures required to leave the EU on October 31.
But Bob Kerslake, a former head of the civil service who is advising Labour leader Jeremy Corbyn, described the document as “credible” and “lays bare the scale of the risks we are facing with no-deal Brexit in almost every area”.
“These risks are completely insane for this country to be taking and we have to explore every avenue to avoid them,” he told the BBC.
According to the government’s internal calculations outlined in the Yellowhammer document, 50 to 85 per cent of HGVs travelling between Dover and Calais would not reach France due to lacking the proper paperwork. This would reduce the flow of lorries to 40 to 60 per cent of the current levels. These lorries would stymie the flow of traffic for at least three months.
The assessment said that the availability of fresh food might be affected by slower trade flows at Dover and medical supplies would be “vulnerable to severe extended delays”. Fuel supplies might also be disrupted if the government set import tariffs to zero and refineries would be at risk of going bust.
Operation Yellowhammer is also preparing for congestion at other key transport links around the country, including at the Eurotunnel, the Eurostarterminal at St Pancras, airports and other ports.
The government is also preparing for clashes between the UK and European nations in its fishing waters. “Significant amounts of police resource” may be required to deal with protests across the country in the face of this action. –
Source: The Financial Times Limited 2019