British Businesses Are Fed Up With Brexit Delays

(Bloomberg) --

A potential delay to Britain’s exit from the European Union is being labeled a mixed blessing by U.K. Plc.

While extending the departure is better for companies than crashing out next month without a deal, it threatens further uncertainty and added costs for businesses that have been preparing for a March 29 split.

“If you’re a business, you wonder, ‘So what the hell do I do now?’,” said Mats Persson, head of Brexit strategy at Ernst & Young. “If the political stalemate continues, it’s just delaying the time the decision has to be taken.”

Prime Minister Theresa May pledged to give Parliament a vote on a short, limited extension to the Brexit deadline, if her deal with the EU is rejected again by U.K. lawmakers. Business groups hope such a delay would help May win over her colleagues on an exit agreement that would allow trade to continue without interruption in a transition period.

Yet the longer the uncertainty drags on, the longer businesses suffer, said Andrew Whiting, chairman of Beech’s Fine Chocolates, which makes luxury confectionery at a factory in Preston, northern England.

Multiple Strategies

“We’re still all just spinning our wheels,” said Whiting. He worries Brexit is holding back orders for his chocolates and fears added administrative expenses if he has to be ready for a different Brexit date. “There’s a cost to having two or three different strategies ready to be launched.”

And should the EU insist on a lengthier delay to Brexit, that could have a chilling effect on investment and hurt productivity, said Mark Ridgway, chief executive officer of Group Rhodes Ltd., an industrial equipment maker in Wakefield, north England.

“Any postponement to 2020 or 2021 would be extremely dangerous for businesses such as ours,” said Ridgway. “Market confidence is falling rapidly.”

No-Deal Risk

Companies have been fighting hard against the risk of a no-deal Brexit. Lobby groups representing about 190,000 businesses across the U.K. economy warned May in a letter Tuesday that leaving without an agreement would be “an unparalleled act of self-harm.”

Despite the time, effort and money invested in Brexit contingency measures, the country will not be ready to face the disruptions that a no-deal departure would unleash, groups including the Confederation of British Industry said, according to a copy of the letter obtained by Bloomberg. More than 12 percent of the U.K.’s food and drink industry anticipates it could be forced out of business if Britain leaves the EU without an agreement.

“The effects on citizens in our communities are becoming a daily reality and will be serious and long lasting,’’ the groups said in the letter. “Cost rises, travel disruption, job losses and reduced shifts would be the reality.’’

While the possibility of an extension makes a no-deal Brexit less likely, there’s a risk that Britain still can’t secure an agreement with the EU that Parliament will get behind -- even with a delay.

“I would rather crash out at the end of March than crash out at the end of May,” said Ian Funnell, U.K. managing director of ABB Ltd, a Swiss manufacturer of industrial equipment, who said he wanted a deal above all else.

Like companies across the country, ABB has been stockpiling materials, hiring staff to handle potential new customs checks and increasing working capital, measures coordinated around being ready for the end of March.

©2019 Bloomberg L.P.