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07 December 2018

ISDA: No-deal Brexit likely; business is not prepared


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A no-deal Brexit is either “very likely” or “quite likely” according to 65% of finance professionals in the latest Brexit Tracker Survey from ICAS in association with leading law firm Brodies LLP.


The online survey also found that fewer than half (45%) of respondents believe their organisation is either “very prepared” or “quite prepared” for the implications should the UK leave the EU in March without a withdrawal agreement in place.

Compared with the previous Tracker poll, more respondents (29% compared with 17% in the Summer survey) believe that, following the Brexit process, the UK will be a member of the EU customs union.

The poll was based on responses from more than 400 members of ICAS across the UK, and was carried out in November, during the week that the draft withdrawal deal was published and agreed – albeit with several resignations – by the UK Cabinet.

CAs fear a ‘no-deal Brexit’ but many are unprepared for it

Respondents are slightly more optimistic regarding the impact of Brexit on their own organisation (from -16 in the Summer 2018 poll to -13 in November, where +50 = “very optimistic” and -50 = “very pessimistic”); they are slightly more pessimistic regarding the impact on the UK economy (from -21 last time to -22 this time).

Only 45% of respondents believe their organisation is prepared for a “no-deal” Brexit; 41% say it is unprepared; 14% don’t know. There is a disparity between large and small organisations, however, with 51% of large organisations “prepared” compared with 33% of SMEs.

The survey found 65% of CAs believe that a “no-deal” Brexit is “quite likely” (42%) or “very likely” (23%).

Around half of large organisations have carried out scenario planning for the implications of Brexit on HR, regulatory issues and the organisation’s business plan. A smaller percentage have started scenario planning for supply chain/logistics (45%); location issues (31%); reviewing business plans (37%); or reviewing contracts (34%).

SMEs (small-medium sized enterprises, with fewer than 250 employees) are less likely to have started taking action or scenario planning (for example, 32% have started scenario planning for their business plan, 17% on hiring/HR issues.

We asked whether respondents were aware of, or had read, any of the UK Government’s notices on the implications of a “no-deal” Brexit. 22% were aware of the paper on Accounting & Auditing and, of those, 4% had actually read it. Of those who had read a summary or the whole paper, 53% found it “quite useful” (47% said it was “not useful”).

Half of respondents were aware of the series of notices on the implications of “no-deal” and 8% had actually read at least one paper. Of those who had read a summary of at least one paper, or any whole paper, 58% found it “useful” (42% said it was “not useful”).

Expectations shift in favour of customs union

Preferences on the ultimate outcome (this refers to the outcome following any transition period, if a transition period for the UK’s exit is agreed) of Brexit talks have not changed at all significantly; 61% would rather see the UK remain in the EU Single Market (Summer Tracker: 62%); and 27% would prefer to see a free trade deal (Summer Tracker: 26%)

Expectations, have changed, however, with 29% now expecting the UK to end up in the EU Customs Union (but not the Single Market) (last survey: 17%), the difference being made by falls in the other options. This probably reflects the draft withdrawal agreement, which creates a “backstop” that could leave the UK in the Customs Union if the Irish border issue is not resolved. [...]

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