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A third of UK firms mull moving abroad over Brexit concerns: Survey

Britain's MPs voted on Tuesday to send Prime Minister Theresa May back to Brussels to renegotiate the unpopular divorce deal she struck with the EU

AFP | PTI  |  London 

Brexit, City of London
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Almost a third of British companies are considering moving or setting up overseas operations because of Brexit, according to a survey published Friday by business lobby group the Institute of Directors.

The IoD survey of over 1,200 company directors found that 16 per cent had already decided to relocate or open operations abroad due to Brexit, while a further 13 per cent said they were considering such plans.

Over a quarter of large businesses have already taken action or will do so in the future, compared with 12 per cent of small businesses.

The finance, manufacturing and science sectors were the most affected, with a third of manufacturers planning to set up foreign operations.

The looks set to benefit the most, with 91 per cent of those planning new foreign operations looking to set up in the bloc.

"It brings no pleasure to reveal these worrying signs," said IoD interim boss Edwin Morgan.

"Change is a necessary and often positive part of doing business, but the unavoidable disruption and increased trade barriers that no-deal would bring are entirely unproductive," he added.

Britain's MPs voted on Tuesday to send Prime Minister back to Brussels to renegotiate the unpopular divorce deal she struck with the EU.

ALSO READ: UK MPs reject chaotic 'no-deal' Brexit, but back May's bid to renegotiate

Brussels has ruled out any big changes to the deal, leaving staring at a no-deal with only 56 days left until the official departure date, which would lead to the imposition of trade tariffs.

"The UK's hard-won reputation as a stable, predictable environment for enterprise is being chipped away," warned Morgan.

"Our political leaders must keep this in the front of their minds as we enter this critical phase of negotiations." Some 64 per cent of IoD members export to the EU, compared with a national average of around only 10 per cent of businesses, although many more rely on supply chains dependent on the bloc.

British industry is ramping up plans for a no-deal Brexit, with companies reporting on Friday sharp rises in both purchasing activity and stockpiling of inputs at warehouses.

"preparations were... a major contributing factor underlying the trends in input buying activity and stocks of purchases," according to the manufacturing Purchasing Managers' Index report released by information provider IHS Markit on Friday.

Inventory holdings increased at the fastest pace in the 27-year survey history, according to the report.

"Businesses did their best to develop forward purchasing programmes to avoid potentially disappointing clients and in case of a bad outcome," said Duncan Brock from purchasing body the Chartered Institute of Procurement & Supply.

"Supply chains were closer to breaking point with stretched capacity and delivery times lengthening again for the 33rd month.

"This begs the question of how much longer suppliers can deliver and businesses can retain stocks for every eventuality," he added.

First Published: Fri, February 01 2019. 18:00 IST