Businesses in south west London have come together to warn of the uncertainty facing them as the UK faces the prospect of a no-deal Brexit.
It comes as joint analysis by the London School of Economics (LSE) and UK in a Changing Europe revealed that the economic cost of a no-deal Brexit could be twice as bad as the impact of Covid-19.
The cost of a no-deal Brexit could be as high as 8% of GDP, according to LSE, compared to the Bank of England’s forecast of the impact of Covid-19 which shows a 1.7% reduction of GDP.
Changes in supply chains, tax regimes and the impact on data flows are just a few of the many concerns to have been raised this week by businesses preparing for the UK’s departure on 31 December.
Chief Executive of West London Business Andrew Dakers, said: “Within the business community there’s a sense of disbelief that it could be this late in the day that negotiations continue.
“There’s also a sense that those in the negotiating driving seat are far removed from the stresses and strains of trying to keep small businesses running.”
Dakers added that west London has already seen a huge economic contraction this year as a result of Covid-19.
A report carried out by Oxford Economics has projected the total impact on Hounslow, one of the worst affected areas in south west London, could be as high as £2.7 billion for 2020/21.
“Remember, this isn’t Brexit in isolation. This is Brexit overlaid on top of Covid-19, and businesses that have got to manage international supply chains and customer bases are despairing,” Dakers said.
A number of boroughs who have already been hit hard by Covid-19 have warned the uncertainty around negotiations poses a significant challenge to preparing for Brexit.
Speaking at a full council meeting last week, Leader of Kingston Council, Cllr Caroline Kerr said the lack of clarity surrounding a Brexit deal is making financial planning extremely difficult.
A report from Kingston Chamber of Commerce in 2019 found that political instability and uncertainty around Brexit is having a detrimental impact on businesses in Kingston.
One business owner commented that Brexit would be a catastrophe for their business.
They added: “A lot of businesses will be impacted for a variety of reasons and this will ripple through the business community, large and small.
“Investors have been withdrawing or holding back from investing in the UK market for some time.”
Speaking in Brussels on 16 December, President of the European Commission, Ursula von der Leyen said there was still no guarantee of a deal.
But, she added: “The path may be very narrow but it is there.”
Richmond Chamber of Commerce has warned that businesses are struggling with the current pandemic, and preparations for Brexit are not currently a priority.
Its chief executive, Anne Newton, said: “Many businesses are so consumed with the pandemic and day to day survival, that preparing for Brexit is truly the last thing on their minds. They simply don’t have the resources to consider how to prepare.”
Moreever, Newton spoke of the potential for a no-deal to inflict further damage on businesses already bearing the economic burden of the pandemic.
She said: “It is evident that the Covid-19 pandemic has had a hugely devastating financial impact on many businesses already and so business leaders are extremely concerned that a no-deal Brexit could deal a further damaging blow to our businesses.
“It could be the perfect storm. Therefore, a disorderly exit from the EU is the last thing any business wants.
“We are pressing the Government to strike a deal as soon as possible and take into consideration the impossible task many businesses face to align their processes, procedures and resources by 1 January 2021.”
Downing Street has announced that the Prime Minister is prepared to recall Parliament over Christmas should a trade deal be agreed with the EU.
Regardless of the outcome from negotiations, there are guaranteed changes that businesses will need to prepare for.
More details can be found here.