Britain’s army of small firms is facing a “life or death” scenario as a no-deal Brexit looks set to usher in an era of higher tariffs, an avalanche of red tape and demands from overseas importers to cover extra costs.
Speaking as the clock reads less than 1,000 hours to Brexit, Paul Hodges, who runs the company Ready For Brexit, warned that the scale of change will “inevitably create winners and losers”.
He argued that SMEs, which employ more than 16 million people in Britain, should follow the lead of larger firms in putting in place drastic contingency plans.
“Most of the 16.3 million people who work in UK SMEs are under the age of 50, and have always operated within the single market and customs union. They often ‘don’t know what they don’t know’ about operating under WTO (World Trade Organisation) rules.
“This includes filling out sometimes very complex customs declaration forms. Time is running out for them to go up the learning curve, as 29 March is not very far away. This is going to be life or death for some firms.”
The news comes as UK businesses exporting to Asia by ship are being told by buyers that, should the UK default to WTO rules and goods be subject to higher tariffs, they must foot the bill or risk their orders being cancelled.
Scotch whisky, one of Britain’s best known exports, is particularly at risk.
“Those shipping to Asia today simply don’t know what the duties will be when the goods arrive on or after March 29. The importers are saying ‘If you can’t guarantee you will cover the duties, we’re going to cancel the order’.
“Scotch whisky exporters, engineering firms, anything that goes by ship is going to be impacted. A lot of these businesses are locked into long-term contracts,” Mr Hodges added.
The WTO duty on whisky into South Korea, for example, would be 20% versus zero enjoyed today as part of the UK’s EU membership.
Many UK firms are locked into long-term contracts that pre-date the referendum and will be legally obliged to stomach the extra costs.
Mr Hodges is offering businesses advice on customs, tax, and employment regulations as they anticipate an avalanche of new bureaucracy and trade barriers if Britain crashes out of the EU without a deal.
The group has formulated a checklist with more than 100 entries that businesses should tick off as Brexit looms.
As it stands, Britain is on course to crash out of the EU on March 29 without a deal.
Hundreds if not thousands of companies have now taken steps to plan for a hard Brexit through relocating jobs and functions to the EU or shutting down UK operations altogether.
These include the likes of Lloyd’s of London, JP Morgan, Barclays, Bank of America, UBS, Panasonic, Honda and many more.