British exporters are unprepared for leaving the European Union, according to a survey published Friday.
Almost half have yet to review their strategies more than a year after the Brexit vote, despite the EU being a trading partner for 85 percent of exporters, the YouGov Plc poll for Lloyds Bank found. Firms will almost certainly face more restricted access to the bloc when Britain leaves in March 2019.
“It’s concerning,” said Clive Higglesden, head of trade at Lloyds Bank Global Transaction Banking. “Wait-and-see is not really an adequate strategy for exporters, and businesses should be acting now to manage any risks on the horizon and possibly explore new opportunities.”
Exporters are currently enjoying what Bank of England Deputy Governor Ben Broadbent has called a “sweet spot,” as they still have access to the single market and the pound’s depreciation since the 2016 referendum has boosted their competitiveness.
But Prime Minister Theresa May has pledged to leave the single market and customs union and instead strike a free-trade agreement with the EU. If the two sides fails to reach a deal or a transitional arrangement, Britain will face tariffs under World Trade Organization rules, a prospect that dismays most businesses.
Trade talks can’t start until agreements are reached on the Irish border, the financial settlement and citizens’ rights, which negotiators failed to achieve in a second round of exit negotiations this week.
Companies are most concerned about volatility in exchange rates and the potential introduction of tariffs over the next five years, the poll of more than 1,000 exporters found.
One in four said they would look outside of Europe for opportunities, and nearly one in three have decided to focus on domestic growth, according to the report. That could expose them to domestic economic cycles, Higglesden said.