Businesses Favor Certainty Over Full Brexit Deal, Study Shows

(Bloomberg) -- When it comes to getting a Brexit transition deal, it’s quality rather than quantity that matters most to U.K. businesses.

Sixty-eight percent of executives from medium to large British companies said they would prefer legal certainty on transition by next month with a less ambitious future deal, rather than a more comprehensive deal that’s not reached until much later, according to a report published by KPMG Monday.

Most businesses “regard certainty around transition as one of the fundamental building blocks for growth,” James Stewart, head of Brexit at KPMG U.K., said in a statement.

“Whilst the public is more fixated on the final deal, the CEOs we’re speaking to are often willing to accept a more modest deal in exchange for certainty so they can make investment decisions now,” he said.

The findings come after Prime Minister Theresa May rejected the EU’s draft deal at the end of February. The draft deal set out in minute detail how the EU wanted to arrange Britain’s withdrawal and would have solidified an agreement made in December into legal language. But May said the text would undermine the integrity of the British economy. “No U.K. prime minister could ever agree to it,” she told Parliament.

The report also found that for one in five firms, it won’t be business as usual in March 2019 if there is no transition deal, as operations are expected to get disrupted. But most business leaders aren’t worried about a no-deal scenario taking place. Seventy-six percent of CEOs and CFOs are confident the U.K. will secure a long term Brexit deal with the EU before March 2019, the report said.

The EU’s chief negotiator Michel Barnier had said he wants the withdrawal agreement done by October 2018, but that deadline could slip closer to exit day.

KPMG conducted the survey of 280 chief executive officers and chief financial officers from medium and large size U.K. companies between Feb. 28 and March 7.

To contact the reporter on this story: Hannah George in London at hgeorge13@bloomberg.net.

To contact the editors responsible for this story: Steve Geimann at sgeimann@bloomberg.net, V. Ramakrishnan

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