-Survey finds surge of smaller companies activating plans to move operations abroad
Nearly one in three British businesses are planning to relocate some of their operations abroad or have already shifted them to cope with a hard Brexit,
according to a leading lobby group.
The Institute of Directors (IoD) warned that 29% of firms in a survey of 1,200 members believed Brexit posed a significant risk to their operations in the UK and had either moved part of their businesses abroad already or were planning to do so.
More than one in 10 had already set up operations outside the UK as the prospect of a no-deal Brexit becomes more likely amid Westminster gridlock. Most firms considering a move were looking to open offices inside the European Union, said the IoD, which represents 30,000 firms .
Edwin Morgan, the IoD’s interim director general, said: “We can no more ignore the real consequences of delay and confusion than business leaders can ignore the hard choices that they face in protecting their companies.
“Change is a necessary and often positive part of doing business, but the unavoidable disruption and increased trade barriers that no deal would bring are entirely unproductive.”
Large companies such as Sony and Panasonic have relocated their European headquarters from the UK to the continent, but the IoD said smaller companies were also enacting plans. Morgan said a surge of smaller firms had activated their plans in the last week.
“While the actions of big companies have been making headlines, these figures suggest that smaller enterprises are increasingly considering taking the serious step of moving some operations abroad. For these firms, typically with tighter resources, to be thinking about such a costly course of action makes clear the precarious position they are in.”
The survey of company directors found that 11% had already executed relocation plans and 5% were planning to relocate in connection with Brexit , while a further 13% were “actively considering” a move out of the UK. Exporters were more likely to consider a move, with two-thirds looking to shift overseas.
Business leaders are becoming increasingly concerned over a build-up of uncertainty while the government attempts to negotiate changes to the Irish backstop , which would keep the UK inside the European customs union in advance of a trade deal being reached.
At the weekend the British Chamber of Commerce (BCC) said thousands of firms were gearing up to move operations abroad or stockpiling goods to combat the worst effects of Brexit. On Wednesday Carolyn Fairbairn, head of the Confederation of British Industry (CBI), Britain’s most powerful business lobby group, warned that businesses were “accelerating” their plans for a no-deal Brexit
“I don’t think there will be a single business this morning who is stopping or halting their no-deal planning,” she said, adding: “I fear they may even be accelerating it.”
Paul Jones, director of Arquebus Solutions, a Coventry-based security consultancy that tracks the illegal trafficking of firearms, said he moved part of the company to Malta to stay inside the EU.
“We work with agencies such as the United Nations and the European commission to support countries that are less advanced in dealing with the threat posed by the criminal use and supply of firearms.”
He said: “We are proud to promote ourselves as a UK company and the union flag is an integral part of our logo. However, we have had to make contingency plans to enable us to continue to be eligible for funding from the EU and to trade with EU member states.”
Ever since the vote to leave the EU in 2016, business groups including the BCC and the CBI have lobbied ministers, arguing that Britain’s exporters needed access to the customs union, which allows goods to be imported tariff-free. But the prime minister has insisted that the UK must leave both the customs union and single market if the referendum result of 2016 is to be fully respected.
Other small-to-medium-sized businesses are now close to executing plans for a partial move. Tim Hardman, managing director of the London-based Niche Science & Technology, said he had recently returned from a trip to Vienna to view office space for an offshoot inside the EU, which currently sets the regulations for the UK’s pharmaceutical industry.
“Britain has been at the forefront of developing the EU’s regulations. Now we are going to be a backwater with no influence at all,” he said.
His business, which employs 18 workers, many of them scientists with PhDs, runs clinical trials and research into medical drugs from its UK base. It has also grown over the last 20 years using EU grant funding, which the firm is reconciled to losing, he said.
“Vienna is a nice place, but we didn’t need to do it and setting up an office and employing people is all extra costs to us.