IFG - Coronavirus has left UK business even less prepared for Brexit

20 Jul 2020 02:37 PM

The coronavirus crisis has left many companies in a worse position to prepare for Brexit than they were ahead of a possible no-deal outcome in 2019, says a new report by the Institute for Government.

Preparing Brexit: the scale of the task finds that many businesses are poorly positioned for the end of the transition period on 31 December. The report also finds that however well businesses prepare, the new friction at the EU–UK border could lead to major disruption, will force many of them to change their operations fundamentally and could even make some unviable.

Coronavirus has starved firms of cash and left many struggling to stay afloat. This has derailed their Brexit preparations, preventing them from investing in new customs processes or stockpiling to protect themselves against disruption to supply chains. Smaller businesses have been particularly badly affected.

Government preparations have advanced at a slower pace due to the crisis, with vital components of Britain’s post-Brexit border arrangements still not ready. The lack of clarity over what – if any – trade deal might emerge from negotiations, and the measures the UK will take to mitigate disruption has also meant that businesses are hesitant to start preparations.

The paper recommends that the government:

  • takes account of the impact of Brexit when finalising its economic response to coronavirus
  • provides targeted support for the least prepared businesses
  • clearly communicates what mitigations or unilateral measures it will put in place.

Joe Marshall, senior researcher at the Institute for Government said:

“With only months to go, providing certainty to business must be a priority for the government. Ministers should work closely with industry to establish what support will be needed for the end of the year. The government should ensure its communications campaign is built on clear, business-friendly information about what steps business needs to take – and when.”

Maddy Thimont Jack, senior researcher at the Institute for Government said:

“Getting ready for the end of transition was a huge task even before the coronavirus pandemic. The government, businesses and people have to be ready for changes to the border, a new migration regime and the introduction of the Northern Ireland protocol next year. This task has been further complicated by Covid-19, which has made businesses less resilient to any additional shock.”

Notes to editors

  1. Full report can be found on our website.
  2. The Institute for Government is an independent think tank that works to make government more effective.
  3. For more information, including data to reproduce any charts, please contact press@instituteforgovernment.org.uk / 0785 031 3791.

Associated documents: