With just 40 days to go before Brexit, businesses are making sure they have sufficient cash reserves and inventories in case of a cliff-hanger Brexit.
With just 40 days to go before the scheduled kickoff of the United Kingdom from the European Union, accounting firm KPMG stated, businesses are getting busy testing their emergency Brexit provisions and ensuring that they have sufficient cash to sustain operations in case of a cliffhanger disorderly exit.
All eyes are on British Prime Minister Theresa May’s ability to win over lawmakers so as to get her Brexit deal sail through parliament. May will have to take a call whether to delay Brexit or thrust the country, the world’s fifth largest economy, into a chaotic uncertainty if she decides to steward the country off a cliff and leave without a deal on March 29, 2019.
“Businesses are now testing the airbags on their Brexit preparations,” said James Stewart, head of Brexit at KPMG UK. “Time is a luxury we no longer have, so people are bracing themselves for the immediate potential impacts.”
He went on to add, “After a slew of poor economic data, and Brexit uncertainty stretching a long way beyond the point most people had anticipated, the mood of business is darkening”.
Unless May opts for a delay, the UK will leave the EU, the world’s largest trading bloc, without a transitionary deal, at 2300 GMT on March 29, 2019. Such a scenario is likely to spook financial markets, and rip apart well-oiled long established supply chains.
With fears growing that the political brinkmanship in London could result, as warned by May, in Britain jumping off the cliff without any parachute, businesses and the EU’s executive have ramped their planning for such an eventuality.
According to KPMG, the probability of the UK leaving with a Brexit deal of some kind stands at around 55%; while the likelyhood of a no-deal Brexit stands at around 30%; the chances of no-deal Brexit stands at 15%.
Britain’s central bank, the Bank of England, has warned that in case of a cliff hanger Brexit, the impact on Britain’s economy would be harder than that of the 2007-2009 global financial crisis.
Brexit supporters say, while there could be some short-term disruption, in the longer run it would be better for the UK.