ICAS: Finance professionals braced for “very likely” no-deal

ICAS: Finance professionals braced for “very likely” no-deal

Bruce Cartwright

Nearly three-quarters (73 per cent) of finance professionals believe that a no-deal Brexit is a “very” or “quite” likely outcome, the findings come from the latest Brexit Tracker Survey from ICAS, the accountancy professional body, in association with leading law firm Brodies LLP.

Just over half (56 per cent) of finance professionals said that their organisation is prepared for a no-deal Brexit.

Only around one in three believe, however, that the UK will formally leave the European Union on the appointed date, 29 March.

Of those polled, 12 per cent said their organisation is “very prepared” for a no-deal Brexit and 44 per cent “quite prepared”; 26 per cent felt “quite unprepared” and 8 per cent “very unprepared” (the balance did not know or preferred not to say).

ICAS chief executive Bruce Cartwright said: “ICAS members are working hard to ensure that their organisations are ready for whatever transpires, and we will be doing everything we can to help them in this.”

“Our major concern, however, is that the clock is ticking down to 29 March and although the UK Government is publishing more guidance there is very little time left to implement it.”

Even among those likely to be affected by specific issues arising from a no-deal Brexit the level of perceived readiness is low:

  • Only 32 per cent of organisations employing EU nationals were positive that management had explained the requirements to register for residence.
  • Only 49 per cent of those expecting to travel to the Schengen zone (for work or otherwise) were aware of the travel rules that might apply following a no-deal Brexit.
  • Only 46 per cent of those with contracts that might be affected by a no-deal Brexit had reviewed those contracts.
  • 22 per cent of exporters that might require an Economic Operator Registration and Identification Scheme number were still in the process of applying for one and 25 per cent had not even started the process.

Looking ahead to when Brexit might happen, however, only around one in three (32 per cent) believe the UK will formally leave the EU on 29 March, while 41 per cent believe it will be later this year. Just over one in 10 (11 per cent) believe the Brexit decision will be reversed.

The survey also found a shift in expectations as to what the ultimate outcome of the Brexit process will bring (Autumn 2018 results in brackets):

  • UK in Single Market 5 per cent (6 per cent)
  • UK in Customs Union (but not Single Market) 24 per cent (29 per cent)
  • A UK/EU Free trade agreement 32 per cent (27 per cent)
  • No Free Trade Agreement 27 per cent (25 per cent)
  • Don’t know 12 per cent (14 per cent)

The Brexit Tracker, which measures optimism/pessimism on a sliding scale where +50 represents “very positive” and -50 “very negative” shows that ICAS members are less pessimistic regarding the impact of a negotiated Brexit.

The “expected impact” on the respondent’s organisation is now rated at only -6 (the most “positive” yet in the Tracker (Autumn 2018: -13). The expected impact for the UK economy as a whole is -11 (Autumn 2018: -22).

The difference between the polls may be partly explained by the fact that, this time, the question referred to a “negotiated Brexit” to distinguish it from a disorderly or “no-deal” exit from the EU.

On the UK economy, over the next two years 40 per cent see interest rates increasing, but to less than 1.5 per cent, while 39 per cent see rates increasing to 1.5 per cent or more; 65 per cent expect sterling to fall; and 75 per cent expect inflation to rise.

Christine O’Neill, chairman of Brodies LLP, said: “Our clients are increasingly seeking advice on the potential consequences of a ‘no-deal’, investing in contingency planning but hoping that an ‘orderly’ exit can still be achieved. We recommend that businesses check their degree of readiness against both of these scenarios.”

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