Businesses cannot afford to trust politicians to come up with a Brexit resolution and should step up preparation for a no deal, the Institute of Directors has warned.

Edwin Morgan, interim director general of the IoD issued the warning after new figures produced by the organisation found that the extension until October had had little initial impact on firms’ Brexit planning.

While the proportion of its members surveyed who had activated contingency plans increased slightly between January and April, from 18 per cent to 23 per cent – more than half have yet to undertake any planning at all.

And only 4 per cent admitted that they would be using the extension to pick up the pace of preparations for Britain leaving the EU without a deal.

The IoD also criticised the Government for offering businesses “limited financial support” for small businesses, having repeatedly called for Brexit planning vouchers to to help SMEs get the professional help they need for complex trade and legal issues.

Mr Morgan said: “This week’s vote won’t be the last twist in the Brexit saga, but it made clear how real the possibility of no deal is. 

“Business can have no absolute reassurance that an agreement will be reached, particularly given the commitment of some Conservative leadership candidates to leaving the EU in October with or without a deal. It feels like the extension is at risk of being wasted.
“It shouldn’t need saying, but many seem to have forgotten that getting a deal would be by some distance the better outcome, both for the UK and the EU. No deal is not ‘clean’, the mitigations announced so far are temporary, incomplete and untested with industry, and we would then have to enter into talks with the EU all over again. 

Far from providing clarity, a World Trade Organisation exit simply extends uncertainty about the future, so it is no surprise a clear majority of IoD members say no deal would harm their business.
“If businesses can’t have faith in politicians, that means they have to look out for themselves. With business costs rising in many quarters, and management time precious, it’s understandable that firms don’t want put resources towards preparing for something we still hope won’t happen. 

“But the risk of no deal is very real, and so we’d urge all businesses, if they haven’t done so already, to carefully consider their exposure and draw up mitigation plans now.”  

Barry Leahey MBE, chair of the IoD’s Cumbria branch and managing director of playground manufacturer, Playdale Playgrounds, said he agreed with the advice.

“I echo the advice given,” he said.

“From a personal perspective as a business leader in Cumbria, as well as the IoD Chair for Cumbria, we have put an extensive plan in place over eight months to ensure we deliver continuity of service to our customers.”

Mr Leahey has previously revealed that while European trade accounted for just 15 per cent of the Haverthwaite-headquartered company’s overseas trade, contingency planning for Brexit was “probably taking up 85 per cent of our export team’s time”.

Playdale Playgrounds has also been stockpiling materials due to uncertainty due to Brexit. In an interview with in-Cumbria magazine this month, he said the company – a Government export champion – had gathered up £100,000 of stock due to the current situation.

Read about stockpiling in the special manufacturing focus by clicking here.