No-Deal Brexit Risk Bigger Than Firms Think, Business Chief Says
No-Deal Brexit Risk Bigger Than Firms Think, Business Chief Says
(Bloomberg) -- U.K. companies and politicians are underestimating the chances of a no-deal Brexit, the head of a business group said.
Britain could tumble out of the European Union by accident or be forced out without a deal by EU leaders impatient with the country’s chaotic effort to leave the bloc, Edwin Morgan, interim director general of the Institute of Directors, said in an interview.
“We do have the risk of no deal happening by accident and businesses still being unprepared,” said Morgan, whose organization has about 30,000 members, comprising company directors and executives. “There’s a bit of a feeling of complacency.”
U.K. companies got a respite when politicians averted a no-deal exit this spring by postponing Britain’s departure to Oct. 31 after Prime Minister Theresa May failed to win support in Parliament for her deal. Without an agreement, trade between the U.K. and the EU would switch to World Trade Organization rules, meaning new customs checks and tariffs that threaten widespread disruption for business.
May could be replaced by a Conservative leader who supports a no-deal divorce, or French President Emmanuel Macron might block a further Brexit delay, Morgan said. The U.K. could also drop out of the EU in the aftermath of a general election or second referendum, he said.
The current Parliament has made clear it won’t support a no-deal, voting against the prospect at least twice this year.
“It’s a higher possibility than Parliament is currently saying,” Morgan said.
A poll ahead of European Parliament elections this month suggests that Nigel Farage’s Brexit Party, which supports a no-deal exit, leads among U.K. voters with 34% support.
The stakes are huge. The EU is Britain’s biggest trading partner, accounting for 48% of U.K. goods exports and 53% of imports in 2017.
But there’s a risk U.K. companies could be less willing to prepare for a no-deal in October because they feel they wasted money on preparations earlier in the year, Morgan said.
To contact the reporters on this story: Joe Mayes in London at jmayes9@bloomberg.net;Alex Morales in London at amorales2@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Tony Czuczka, Neil Chatterjee
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