No-deal Brexit fears build

By Rod Addy contact

- Last updated on GMT

Brexit: the clock is really ticking now
Brexit: the clock is really ticking now
Businesses' Brexit fears have snowballed, amid a House of Commons statement yesterday that 3,500 service personnel were on standby to support Government departments in the event of a 'no-deal' scenario.

Five business groups published a statement today warning of "massive costs"​ and disruption across all industries in the event of the UK falling out of the EU on March 29 2019 without a deal.

The Confederation of British Industry, the British Chambers of Commerce, EEF - the manufacturers' organisation - the Federation of Small Businesses and the Institute of Directors all backed the statement.

“Businesses have been watching in horror as politicians have focused on factional disputes rather than practical steps that business needs to move forward,"​ it read. "The lack of progress in Westminster means that the risk of a ‘no-deal’ Brexit is rising. Businesses of all sizes are reaching the point of no return, with many now putting in place contingency plans that are a significant drain of time and money.

"Firms are pausing or diverting investment that should be boosting productivity, innovation, jobs and pay, into stockpiling goods or materials, diverting cross border trade and moving offices, factories and therefore jobs and tax revenues out of the UK. While many companies are actively preparing for a ‘no deal’ scenario, there are also hundreds of thousands who have yet to start – and cannot be expected to be ready in such a short space of time.

“All this activity stems from the growing risk of leaving the EU on 29 March without a deal. With just 100 days to go, the suggestion that ‘no-deal’ can be ‘managed’ is not a credible proposition. Businesses would face massive new customs costs and tariffs. Disruption at ports could destroy carefully built supply chains ... This is not where we should be."

The joint statement urged MPs to return to their constituencies over Christmas and discuss the matter with local businesses.

Statement signatories

Dr Adam Marshall, Director General, British Chambers of Commerce

Carolyn Fairbairn, Director General, Confederation of British Industry

Stephen Phipson CBE, Chief Executive, EEF, the manufacturers’ organisation

Mike Cherry OBE, National Chairman, Federation of Small Businesses

Stephen Martin, Director General, Institute of Directors

Meanwhile, John Perry, managing director at supply chain consultancy Scala, urged businesses to use the looming presence of Brexit as motivation to rejig their supply chains. "If nothing else, the past two years have proven how precarious our situation really is. Brexit should therefore act as the catalyst businesses need to re-optimise their supply chains, ensuring they are as agile as possible and prepared for any future unforeseen events.” 

Speaking in the House of Commons yesterday, Conservative MP for Colchester Will Quince asked: "Has the Secretary of State received any approaches from other departments about using our world-class armed forces personnel in the event of a no-deal Brexit?

Defence Secretary Gavin Williams replied: "As yet, we have received no formal requests from any department, but we are making contingency plans. We will ensure that 3,500 service personnel, including regulars and reserves, are held in readiness to support any department with contingency needs."

A statement from the Treasury and Chancellor of the Exchequer Philip Hammond yesterday confirmed more than £2bn of additional funding to prepare for all Brexit scenarios had been allocated across 25 Government departments.

Hammond backed Theresa May's current Eu exit deal with Brussels: "The Prime Minister's deal is the only way to deliver on the referendum while protecting jobs, businesses and prosperity. I’ve worked with departments so they have the resources to prepare as we leave the EU, including our borders, trade policies and support for businesses. But a responsible government prepares for all contingencies and that is why we’re stepping up no deal planning.

"The Treasury has provided more than £4.2 billion for Brexit preparations since 2016. We are now allocating over £2 billion from that fund to continue and step up this work in 2019-20 as we leave the EU."

The five biggest Brexit preparation allocations confirmed were for the Home Office (£480m), Defra (£410m), HMRC (£375m), BEIS (£190m) and the Department for International Trade (£128m), said Hammond. All the funding covers 2019-20, and was for core Brexit activity, including deal and no deal preparations. It followed an earlier £1.5bn allocated in the Chancellor's Spring Statement for 2018-2019.

The money would be used for contigency planning, including:

  • Home Office funding to increase Border Force capability with hundreds of new officers, continue preparing the EU Settlement Scheme to offer settled status and prepare law enforcement national security preparations.
  • In addition to taking back control of our waters, Defra would use its funding to deliver arrangements at the border and beyond to ensure uninterrupted trade in fish and fisheries products, chemicals, and agri-food.
  • The Department for Business Energy and Industrial Strategy would deliver business stability for company law and audit, in addition to developing options for a UK Global Navigation Satellite System.
  • Her Majesty's Revenue & Customs (HMRC) would employ more than 3,000 customer service and compliance staff in operational roles to handle increases in customs activity, ensuring trade continues to flow and revenue is protected. HMRC would also use its funding to deliver new technology and IT requirements at the border to ensure trade was as frictionless as possible.
  • The Department for International Trade would use its allocation to secure post-Brexit continuity for about 40 trade agreements covering over 70 countries, accounting for 12% of the UK’s total trade. It would also use its funding for work on future trade agreements around the world.

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