LONDON—As Brexit looms nearer—as of now, the United Kingdom’s departure from the European Union is still set for Oct. 31—economists and executives continue to present an uncertain forecast for the country’s business future.
The Institute of Directors (IoD), a long-running organization for senior U.K. business leaders, published a new survey this week that calls Brexit an “impossible situation” for businesses, and urges both the U.K. and the EU to strengthen efforts to come to a deal that would be beneficial for businesses in and out of the U.K.
In a new survey of 950 British business leaders, just over half said a no-deal Brexit—the outcome if Parliament cannot come to a resolution with the EU on how to navigate issues like trade and immigration in a post-Brexit world—would be a more negative outcome for their businesses than an extension of Article 50 (the process of the U.K. leaving the EU), which would leave businesses in Brexit limbo even longer. Thirty-two percent believed that extending Article 50 would be a worse outcome for their businesses.
In the meantime, businesses are planning for the impact of Brexit, though only 13% to 26% of businesses (depending on size) believe they are fully prepared for Brexit, and over 52% to 57% businesses believe that they cannot be fully prepared for it. According to the IoD’s survey, 11% of those surveyed are actively considering moving operations outside of the U.K., 4% plan on doing so, and 14% have already moved their operations outside the U.K.
“Firms are facing an impossible situation as they try to prepare in advance for the possibility of simultaneous sweeping changes on an unprecedented level,” said Allie Renison, head of Europe and trade policy at the Institute of Directors in a statement. “The idea of leaving the EU without a deal in place is certainly the bigger concern, but the prospect of repeated delays with no clear path forward is far from an appetizing prospect for enterprise.”
She added: “Crucially, both U.K. and EU politicians need to strain every sinew to find a deal, extension or not. Compromise is not a dirty word, and neither side wants to be managing the fallout of no-deal [Brexit] for the foreseeable future. This is as much about the jobs and livelihoods of those who would be most affected as it is about politics and procedure.”
Also on Monday, the British Chambers of Commerce (BCC) announced it would be downgrading its business investment growth forecast for the rest of 2019 and 2020. After a drop of 0.4% in 2018, the BCC predicted declines of 1.5% this year and 0.1% in 2020, which would be the longest slump in business investment in 17 years.
The British economy, meanwhile, will grow by just 1.2% this year and 0.8% in 2020, according to the BCC.