Two in five (40 per cent) middle market companies say the decision to leave the European Union has already had a negative impact on their ability to trade with the bloc, according to RSM’s latest Brexit Monitor.
The survey of more than 300 middle market business leaders conducted by YouGov found that the impact was most pronounced among manufacturing companies, almost half (48 per cent) of whom said they had been already been negatively affected.
The UK’s reputation has also taken a sizable knock. Certainly, Brexit and its ripple effect has bruised the UK’s status as a leading centre for business. RSM’s findings found that half (49 per cent) of those surveyed say the decision to leave the EU has had a negative impact on the UK’s trading reputation. What’s more, two-fifths (43 per cent) believe it has been harmful to the UK’s reputation as a place to investment in while under half (47 per cent) a place to do business in.
RSM’s partner and head of international trade and customs Brad Ashton says that ‘naturally at this point of uncertainty, all sectors except consumer are considering changing aspects of their supply or relocating stock holdings. Not one sector across the UK was more likely to say that the decision to leave the UK has enhanced the nation’s reputation in the criteria’s asked about.’
The manufacturing sector was most likely to report a negative impact on trade with the EU (48 per cent), although interestingly a third (34 per cent) in construction believe the impact has been positive. Half (46 per cent) in construction also believe the decision to leave has had a positive impact on trade with countries outside the EU.
Brad Ashton comments though that:
London for once is seeing the sunny side, with firms in the capital slightly more likely than other regions to believe there has been a positive impact on trade outside the EU, although three-fifths (59 per cent) in the North West do not perceive any impact.’
It is certainly concerning that despite the potential consequences of Brexit and all it means for import and export trade, around a third of businesses still have not mapped out their supply chains to identify the potential issues and challenges. In fact, only 54 per cent of businesses surveyed have identified upstream and 53 per cent their downstream supply chains, while around 15 per cent are unsure if they even have at all.
With 26 per cent saying they will most likely have to raise prices to absorb the supply fallout, which is then likely to increase costs, this is highlighted as the biggest impact Brexit will have on their supply chain. At least a quarter of each sector has seen raised prices, meaning that the biggest impact on UK businesses is the ability to trade. ‘With this in motion, surely industries are then reacting quickly, which in turn throws the market out of kilter for everyone else’ warns Brad Ashton.
The survey also found that just one in five (18 per cent) of companies surveyed had obtained an Economic Operator Registration and Identification (EORI) registration number which will be needed to make customs declarations in order to be able to continue to trade with the EU post-Brexit.
While a third (30 per cent) of respondents said that they intended to obtain an EORI before 29 March, one in five either didn't know (10 per cent) what an EORI was or that they didn’t need to obtain one (9 per cent).
For some businesses that are already VAT registered the process for obtaining an EORI can be straightforward. However, for non-VAT registered businesses the process is more complex and time consuming.
Brad Ashton adds: 'The Government has made efforts to encourage businesses trading with the EU to obtain the necessary registrations in the event of a no-deal Brexit. However, I suspect there will be a great many companies that don't know what the requirements are and won't have the necessary paperwork in place prior to the 29 March.
Those who do trade with the EU and who haven't yet obtained an EORI need to get their skates on as the clock is ticking.
'Business trading with Europe also have the double whammy of getting to grips with the new Customs Declaration System and the new Making Tax Digital regime both of which come on stream from 1 April.
'With fewer than 30 days to go until we leave the EU, businesses have to make every minute count to ensure they are as prepared as they can be for a worst-case scenario.'
For further information, view RSM’s five-point plan on how to prepare for Brexit.