Brexit process needs more clarity, say finance professionals
Only around a third of finance professionals in large businesses say their organisation has started scenario planning for the impact of Brexit on key areas, such as hiring/human resources and supply chain/logistics.
Confidence that the UK Government can negotiate a free trade deal with the European Union is also waning, and key elements of the UK Government’s negotiating potion are “unclear”.
These are among the findings of ICAS' latest Brexit Tracker survey, in association with leading law firm Brodies LLP.
The Tracker is based on an online survey of CAs carried out in July 2018, shortly following the publication of the UK Government’s white paper The Future Relationship Between the United Kingdom and the European Union. Just over 600 members completed the survey.
Level of preparedness is still low
Around eight out of 10 of the respondents in smaller organisations (below 250 employees) say their organisation has taken “no action” as regards hiring/HR, supply chain/logistics and reviewing contracts.
Of those in larger organisations (250 employees or more), a minority had started scenario planning for hiring/HR (36%), supply chain/logistics (36%) and regulatory change (43%).
Several key elements in the UK Government’s negotiating position are not well understood by business.
Even fewer had so far sought external advice on hiring/HR (21%), supply chain/logistics (16%) and regulatory change (25%).
Lack of clarity as to what the environment will look like following “Brexit Day” on 29 March next year could be a factor holding back preparations. Several of the key elements in the UK Government’s negotiating position are not well understood by business, for example:
- A “maximum facilitation” arrangement for customs duties (only 27% rated this as “very or fairly clear”);
- A “customs partnership” whereby the UK would collect EU duties on imported goods bound for customers in the EU (only 32% rated this as “very or fairly clear”); or
- A “common rule book” covering trade in goods (only 26% rated this as “very or fairly clear”).
Confidence in a UK/EU trade deal falls
Respondents’ preferences regarding the future UK-EU relationship remain stable, with 62% preferring that the UK remains in the Single Market, 5% preferring the UK to remain in the EU Customs Union and 26% favouring participation in a UK/EU free trade agreement. These numbers are closely in line with the Brexit Tracker poll in autumn 2017.
The number of CAs who believe that the UK will reach a free trade agreement with the EU has fallen.
In terms of the expected outcome* however, the number of CAs who believe that the UK will reach a free trade agreement with the EU has fallen to 29% (autumn 2017: 36%), equal to the number that believe the UK will have no free trade agreement (autumn 2017: 29%). The number opting for “don’t know” has doubled from 9% last autumn to 18% this summer.
* This refers to the outcome following any transition period, if a transition period for the UK’s exit is agreed
Optimism over Brexit is waning
The “Brexit Tracker”, which charts optimism/pessimism from plus-50 (very optimistic) to minus-50 (very pessimistic), shows that concerns over Brexit are deepening slightly, as shown below (summer 2017 figures in brackets)
- Impact on you and your organisation so far -10 (-9);
- Expected impact post-Brexit, for you and your organisation -16 (-14);
- Expected impact on the UK economy post-Brexit -21 (-16).
Bruce Cartwright CA, ICAS Chief Executive commented: “It has always been the case that ‘nothing is agreed until all is agreed’.
“ICAS members’ concern over the outcome of the Brexit process is understandable, since there would appear to be some fundamental areas of disagreement with only a few months to go.
“There is, however, a clear shared objective to reach agreement and deliver much needed clarity.”
Christine O’Neill, Chairman, Brodies LLP said: “Many SMEs simply do not have the resources to ‘scenario plan’ or to invest in contingency measures in anticipation of Brexit. Rather, they will rely on industry bodies and on Government to provide guidance and support.”
She added that businesses should pay close attention to the guidance and proposed orders being released over the next few months under Brexit legislation.