According to the Bank of England, around a quarter of the UK’s smaller firms are less likely than other firms to have made contingency plans for an eventual Brexit because they cannot afford them.
The Bank’s quarterly inflation report suggests that although planning for Brexit is relatively well advanced across all sectors there are “a substantial number” of businesses that do not have the resources or a sense of what they can do, and are “hoping for the best”.
The report found that small firms blamed a lack of resources and “lower perceived benefits” for why they had not drawn up any Brexit plans. These reasons echo previous business surveys that suggest that smaller firms are reluctant to spend cash on preparing for outcomes that may not transpire.
However, according to the report, it is a different story for the majority of businesses, with three-quarters of them either having an agreed Brexit plan in place or in the process of developing a strategy. Meanwhile, around one-third of businesses said they had hired a consultant to help them prepare.
Interestingly, around two-thirds of those polled by the Bank said they were ready for a no-deal Brexit, which is a rise from half of the respondents of the March survey. Of those who said they were prepared, one-third said they were only as ready as they could be, and the lack of clarity over Brexit has meant that many have been unable to draw up plans.
The report also said that, while stockpiling for Brexit has given the economy a boost, the costs may have begun to take their toll on businesses which have started to burn through reserves. Some firms now face the dilemma of whether to maintain levels of stockpiling or run off what they have.