techUK members survey: How prepared are members for a no deal Brexit?

13 Sep 2019 09:31 AM

techUK has surveyed its members to gather their views on a no deal exit on October 31 2019, how prepared our members are for no deal on this date and what steps they would like to see the Government take to support them through a no deal outcome.

The survey was run by IPSOS Mori and follows a previous survey of members in December 2018 which sought members’ views ahead of an exit date on 29 March 2019.

Members views on the impact of no deal:

techUK’s members have not changed their view on the impact of no deal, with 71% saying that no deal will have a negative impact on their business (69% reported this in December 2018).

Impact of a ‘No Deal’ Brexit on your business – 2018 vs 2019

• Of all members surveyed in August 2019, 44% believed a no deal exit in October would have a fairly negative impact on their business, while 27% believed it would have a very negative. 
• Just 3% of members said that a no deal Brexit would have a fairly or very positive impact on their business in August 2019, compared with 5% in December 2018.

Main concerns on the impact of no deal: 

Members surveyed were asked to select their main concerns regarding the impact of leaving the EU without an agreement in October 2019. Following their selection of concerns, members were then asked to choose among those they had picked, which issue would be their top concern.

Among their main concerns: 

• The overall negative impact on the economy and a slowdown in business (73%)
• Confusion and uncertainty over the regulatory compliance requirements following a No-Deal exit (51%)
• Additional regulatory barriers to access EU markets/ divergence between EU and UK markets (47%)
• Impact on the ability to retain and recruit talent from EU 27 countries (45%)
• Disruption to the free flow of personal data between the EU and the UK (38%)

When members were asked to select their top concern from among their choices 44% of all members surveyed said that an overall negative impact on the economy and a slowdown in business was their number one concern.

How prepared are techUK’s members for no deal in August 2019:

More businesses have taken active steps to prepare for a no deal exit between December 2018 and August 2019.

• In December 2018, 51% of members surveyed said that they had taken some or many steps to prepare for no deal. This increased to 67% in August 2019, while the proportion of those who reported taking no active steps fell from 42% to 28%. 

More than half of small businesses (under 50 staff) and one third of medium-sized business (between 50 and 250 staff) have still not taken active steps to prepare for no deal:

• In August 2019 53% of small business had still not taken any active steps to prepare for a no deal exit (down from 65% in December 2018), with the top reason for not taking steps to prepare among small businesses being ‘unable to predict implications of ‘No-Deal’,62% said this.
• In August 2019 33% of medium sized business had taken no active steps to prepare for a no deal exit (down from 46% in December 2018) with the top reason for not taking steps to prepare among medium sized businesses being ‘unable to predict the implications of ‘No-Deal’, 65% said this.

Large businesses (over 250 staff) are more confident about their no-deal preparations than small and medium sized businesses:

32% of large businesses said they were very prepared for no deal, while 55% said they were fairly prepared.

• Just 5% of small businesses said they were very prepared, with 38% saying they were fairly prepared.
• Just 6% of medium sized businesses felt they were very prepared, while 44% said they were fairly prepared.
• Overall 87% of large business reported being fairly or very prepared for a no deal exit in October 2019, compared to 43% of small businesses and 50% for medium sized businesses.

Large businesses were also more likely to be aware of information and support available from Government to help businesses prepare.

• When asked, are you aware of any information or support that the Government has made available to help your business prepare for a ‘No-Deal Brexit’ in October 2019, large businesses were twice as likely to be aware of information available than small and medium sized businesses (small 30%, medium 33%, large 68%)
• Large businesses were more likely to be aware of support on offer from the Government (small 15%, medium 19%, large 30%).

What steps members would like to see the Government take in a no deal exit:

In the event of no deal, techUK asked its members what would be the most useful steps Government could take to help its members prepare. This was divided into three sections, financial support, communications support and support to navigate tariff and non-tariff barriers. Members were asked to select, from a list of options, which types of support would be useful for them. Following their selection of support that would be useful, members were then asked to choose among those they had picked, which issue would be the most useful form of support.

On financial support:

• 36% requested tax relief/ financial support for companies to pay for professional services that would help them prepare for no-deal, such as legal support to amend contracts to include free flow of data provisions
• 27% requested the UK Government to partially offset the costs of any tariffs imposed on products sold into the EU for a limited time after no-deal
• 24% requested guarantees for existing funding delivered through EU programs, for example venture capital and R&D funding through EU institutions such as the European Investment Fund and Horizon 2020
• 23% requested co-ordination with banks or Government support to make available low interest or interest free loans to business to prevent cashflow problems

When asked what their top request of Government was, 1 in 5 members (18%) identified tax relief and financial support for companies to pay for professional services that would help them prepare for no-deal, such as legal support to amend contracts to include free flow of data provisions as their most useful support.

On communications support:

• 38% requested updated technical notices for Brexit preparedness and a dedicated government helpline for business support
• 33% chose a designated SME support service to provide and communicate support for SMEs such as on the introduction of tariffs and the extra administrative burdens of a no-deal exit
• 32% requested the Government publish explicit details of any planned compensation, adjustment and assistance for companies badly affected by new trading arrangements ahead of a No-Deal exit
• 26% requested information to be released on how businesses can communicate to civil servants’ details of any negative or unintended consequences relating to the new tariff schedules ahead of a no-deal exit

One quarter of members surveyed(24%) choose a designated SME support service to provide and communicate support for SMEs such as on the introduction of tariffs and the extra administrative burdens of a no-deal exit as their top request of Government of those they had picked.

On navigating around tariff and non-tariff barriers:

• 53% requested a commitment to align with EU single market rules and standards for six months or more after a no deal exit.
• 49% requested a temporary extension of freedom of movement/ a highly simplified immigration scheme for EU migrants.
• 48% requested to begin preparations to immediately request an adequacy agreement on data with the EU if No-Deal occurs.

One third of members (30%) identified a commitment to align with EU single market rules and standards for six months or more after a no deal exit as their top request of Government to navigate tariff and non-tariff barriers.

Methodology

The full results of our survey can be found here 

To ensure the anonymity of those taking part and to provide support on the design of the questions, techUK commissioned Ipsos MORI to conduct an online survey. It ran between 14thto 30thAugust 2019, with subsequent analysis and interpretation undertaken by techUK.  

A 23% per cent response rate was achieved, with 193 members responding out of 841 who were sent the invite to participate. Data is unweighted.

The profile of those responding by size of business was as follows:

• Small business (less than 50 staff):           60
• Medium sized business (50 to 250 staff):  52
• Large business (250 or more staff):           80
• Refused:                                                    1