‘Information void’ on Brexit has left UK firms ‘in dark’

BRITISH firms have been left in the dark over planning for Brexit amid an “information void”, according to a leading UK business group.

The Institute of Directors (IoD) called on the UK government to speed up guidance on what companies should expect if no deal is reached on leaving the EU.

A survey of 800 business leaders showed that less than a third had made any Brexit contingency planning.

Many said they were waiting for clarity about the future relationship with the EU.

It comes at the end of a torrid week when a series of influential groups in the British business world have questioned the Brexit strategy.

Stephen Martin, director general of the IoD, said: “Many companies are still unprepared for Brexit, and it’s hard to blame them. When it comes to knowing what to plan for and when, firms have been left in the dark.”

A food industry boss this week called for a meeting with the government as he warned that Brexit is becoming “the stuff of nightmares”.

UK Food and Drink Federation (FDF) chief executive Ian Wright urged ministers to explain the implications of a no-deal Brexit to businesses in the industry.

Jim Winship, director of the British Sandwich and Food to Go Association, told BBC’s ‘Newsnight’ on Monday: “We live in a just-in-time world. We don’t stockpile ingredients.”

Further concerns emerged on Tuesday when local government officials in Dover, across the Channel from France, released an assessment of how a no-deal Brexit would affect the area around Europe’s busiest ferry port. The assessment, named Operation Brock, suggests there would be a continuous backlog of trucks waiting to cross the English Channel, creating a gridlock as far as 65km inland.

In the British health service, NHS officials have highlighted the possibility of staff shortages, that costs “may go up” and that the quality and pricing of food could be affected.

Specialist equipment or parts sourced from the EU could potentially be “less accessible”, a report warned.

The Bank of England raised its main interest rate yesterday for only the second time since the 2008 financial crisis as it weighed a strong jobs market and high inflation against growing concerns about Brexit.

The London Stock Exchange Group (LSE) has also kick-started its preparations for a hard Brexit, warning that the terms of the UK’s exit are still “unclear”.

The company has cautioned that a provisional agreement between negotiators in the UK and Brussels is yet to be approved by parliaments on both sides of the Channel, and could fall apart.

THE pound fell yesterday despite the Bank of England lifting interest rates from crisis-era lows, after Governor Mark Carney said monetary policy needed to “walk not run” and expressed concern about the risks of a cliff-edge Brexit.

The move raising 25 basis points to 0.75pc was widely expected, although the unanimous decision of the BoE’s nine rate-setters was not.

The market initially took that unanimity as a more hawkish-than-expected sign.

But sterling later succumbed to selling pressure and dropped as much as 0.8pc to $1.3016, down from around $1.31 before Mr Carney had started his news conference. A stronger dollar added to the pound’s struggles.

The currency also fell against the euro, by 0.4pc to as low as 89.25 pence.

“For me the pound is moving lower as Carney is showing some sympathy towards a possible hard Brexit, they are preparing for it, as we know.

“The ‘walk not run’ comment looked to coincide with a further solid move lower for the pound,” said Neil Jones, head of Hedge Fund FX sales at Mizuho.

Given the lack of certainty about the sort of trading deal Britain can secure with the European Union, and with inflation forecast to fall towards its 2pc target over the next three years, Carney reiterated that the bank would raise rates only gradually and to a limited extent.

“Policy needs to walk – not run – to stand still,” he said.

Investors have been betting on there being no further hikes before Britain leaves the European Union in March, limiting any strength in the pound.

Sterling has lost almost 10pc of its value since hitting a post Brexit-referendum high in April, amid worries that Britain will fail to secure a trade deal before it exits the EU in March.

London and Brussels, as well as members of UK Prime Minister Theresa May’s government, remain far apart on what the future trading relationship should look like.

“Its a slightly more hawkish rate hike than expected,” said Kallum Pickering, a UK economist at Berenberg, predicting there wouldn’t be another hike until May. “It’s all about Brexit for sterling now.”

The market is pricing in the next rate hike for September 2019, based on the money market ‘Sonia’ curve, Societe Generale fixed income strategist Jason Simpson said.

In making its predictions, he said the market was “whacking in some big assumptions like a smooth Brexit”.

Economists have challenged the need for yesterday’s hike given the risks posed by Brexit and the harm an escalating tariff conflict between Washington and Beijing could do to the global economy. (Reuters)