Frances Ball 29 Jul 2019 11:38am

Neither UK nor EU ready for no-deal, says CBI

A contingency planning study by the CBI shows that both sides of the channel are still unprepared for a no deal Brexit

The CBI makes 200 recommendations in its report, ‘What comes next? The business analysis of no deal’, having analysed existing plans across the UK government, European Commission, member states, and companies.

Although “highly regulated” sectors like financial services are well prepared for the immediate impact of no-deal, the CBI says, the majority of smaller businesses cannot feasibly prepare for it without sufficient resources.

“No one is ready for no-deal”, the report confirms. The CBI reiterates that securing a deal would be the most beneficial route for business, but its report makes clear that “the expectation of achieving such a deal has been falling steadily for the last 18 months”.

In 27 key areas of the economy, despite existing mitigations, 24 will experience disruption immediately after a no-deal exit.

“There are no areas of relevance to the economy where the UK, the EU and the business community are all prepared well enough for no-deal”, the CBI says.

Businesses have been hampered in preparing for Brexit by a lack of clear information, the report says in its recommendations for the UK.

The CBI recommends that the civil service should be put on a no-deal footing, and a plan should be brought forward for business engagement: similarly, there should be a review and an update for all technical advice on Brexit by the middle of August.

By the beginning of September, the business group says, there should be a targeted communications campaign with clear advice for companies on little-discussed topics like data sharing.

“A week-long focus on each ‘hidden issue’ would be an effective way of campaigning”, the report points out.

The EU must also take steps to prepare, the CBI says.

By the start of September, it suggests, the EU should bring forward the ability for UK firms to apply for essential licenses as a third country.

“If no deal occurs,” the CBI says, “match, at least for a period of time, the UK’s temporary mitigations”.

The CBI’s report makes clear, “No-deal is an untenable state of affairs.” If the UK leaves without a deal at the end of October, the business group recommends that full negotiations should be re-opened as soon as possible.

One caveat for business advice is how much resource they can allocate to no deal preparation. Ideally, businesses would have made plans to communicate their needs to the UK and EU governments – but the CBI acknowledges that this requires resources.

Ultimately, businesses must “prioritise people”, the CBI says.

“It is not just today’s jobs that rely on a smooth withdrawal from and deep relationship with the EU, says Carolyn Fairbairn, director general of the CBI. It is also “the jobs of the decades ahead”.

Until a deal becomes reality, says John Hardie, deputy director general of the CBI, “all must prepare to leave without one”.