Firms factoring in consequences of no-deal Brexit

LEICESTERSHIRE businesses are finally gearing up to deal with the potential consequences of Brexit.

The news comes amid growing concerns about a possible no-deal withdrawal which would cause restrictions in trade between the UK and Europe, and has prompted the Government to offer guidance on stockpiling necessities such as medicine and food and to bring in firms to run new cross-Channel ferry routes should ports such as Dover grind to a halt.

Figures from HM Revenue & Customs show that Leicestershire, Rutland and Northamptonshire businesses are more reliant on the EU than other parts of the UK. The three counties exported almost £3.4 billion worth of goods to the EU in 2017, some £412 million more than the near £3 billion of goods the region exported to the rest of the world.

At the same time, the three counties imported £5.4 billion worth of goods from the EU – around £1 billion more than the £4.4 billion they bought from the rest of the world.

It comes amid continued uncertainty about the terms on which the UK will leave the EU in less than three months’ time.

While it is not yet known how Brexit will affect those figures, a survey of mid-sized firms by accountants Grant Thornton suggests almost four in five are now preparing for a possible negative impact on their overseas trade, with most also factoring in the consequences of a nodeal withdrawal on March 29. That is a huge increase from six months ago, when just one in four businesses had planned for the effects of the UK’s departure from the EU.

Major Leicerstershire businesses already planning for a possible hard Brexit, which would see the UK cut its trading partnership with the EU entirely, include Harborough-headquartered Joules, which is teeing up a warehouse in Europe to ensure its EU customers can still buy its products.

It is also planning to bring items into its Corby warehouse a few weeks earlier than usual in the run-up to the withdrawal date.

Enderby-based Topps Tiles is buying in enough of its biggest sellers to tide it over for five or six weeks in case of port delays following the withdrawal.

And in September, Next PLC, also based in Enderby, warned about potential port delays, increased tariffs and a drop in the value of the pound from a no-deal Brexit.

In the run-up to Christmas, Theresa May was forced to postpone a Parliamentary vote on the withdrawal deal she has negotiated with the EU after failing to get support from MPs. A vote will finally take place later this month.

Meanwhile, the Grant Thornton research suggests that more firms are confident the ultimate agreement will be positive for business – up from one in four to almost a half.

Tom Copson, a director at the East Midlands Grant Thornton office, in Regent Road, Leicester, said: “Over the past six months, businesses have realised they can no longer afford themselves a ‘wait and see’ approach to preparing for Brexit and have started to take the necessary steps to fortify their operations.

“As the Government itself steps up its ‘ no deal’ contingency planning, businesses would be wise to plan for the worst, while still hoping for the best. With less than 100 days to go until the UK leaves the EU, and an agreeable deal yet to surface, the prospect of the UK crashing out of the EU in a ‘no deal’ situation seems likelier by the hour.”

The HMRC data showed almost 15,000 businesses in Leicestershire, Rutland and Northamptonshire were involved in exporting to the EU – with Germany the biggest partner, buying £828 million of goods in 2017. Outside the EU, their biggest market was the USA, which bought £828 million of goods in 2017.