- A third of UK food and drink companies said they definitely won't be ready for the end of the
Brexit transition period, in a survey shared exclusively with Business Insider. - Many of them said they could not be fully ready due to the pressures of the coronavirus pandemic.
- Just 3.5% of companies said they were fully prepared for a new trading relationship with the European Union January 1.
- The findings paint a worrying picture of business readiness with eleven weeks to go until the transition period ends.
- There is growing tension between
Boris Johnson 's government and industry leaders amid suggestions that ministers are trying to blame businesses for a lack of readiness.
A survey of UK food and drink companies shared exclusively with Business Insider, found that just 3.5% said last month that they were "fully ready" for Brexit with a third saying they don't expect to be ready in time for the UK leaving EU trading rules at the end of 2020.
The food and drink sector is set to be heavily affected by Britain's exit from European trading rules, with companies bracing themselves for checks on goods and new rules for labelling, regardless of whether the UK and EU strike a new free trade deal.
In the absence of a free trade agreement, costly tariffs will be slapped on food and drink products, making it more expensive for British businesses to sell to the EU and creating the likelihood of price rices in UK supermarkets.
The survey carried out by The Food & Drink Federation found that just 3.5% of businesses believed they were "fully prepared" for January 1.
A third — 33.3% — said they would not be ready on time despite their efforts to prepare, with a number citing the coronavirus pandemic as the key reason. 19.3% said "we have done as much as we can, but cannot be fully prepared by 1 January 2021," while 14% said "impacts of Covid-19 mean we do not have the capacity to fully prepare in time."
10.5% of companies said they would prepare for changes "when there is certainty about a deal with the EU," which might not come until several weeks before the end of the year, if at all. UK and EU negotiators are not expected to strike an agreement before the EU Council Summit on Thursday and talks are set to continue into the autumn.
Just over half of the companies — 52.6% — said they have "more to do" but "intend to be fully prepared."
The survey carried out between 12 August to 9 September, is the latest sign that swathes of British businesses are not ready for a series of changes to how UK trade with the EU will work in around eleven weeks' time.
Another survey carried out by the UK government over the summer found that less than a quarter of businesses overall felt "fully ready" for the end of the transition period, while 40% believed the transition period would be extended despite the legal deadline for doing so having already passed.
A statement this week by UK Business Secretary Alok Sharma indicated a greater sense of urgency in the government's message to businesses, with the minister warning that they face disruption in January "unless you take action."
Sharma said: "I know these are challenging times, however it is vital that your business prepares now for our new relationship with the EU, outside of the single market and customs union.
"There are 80 days until the end of the transition period and there will be no extension, so you need to act now."
There is growing tension between Johnson's government and industry figures amid suggestions that ministers are trying to blame businesses for their lack of Brexit readiness.
On Tuesday, several reacted angrily to Cabinet Office minister Lord Agnew, who told the Treasury Committee that businesses had to "wake up" and accused them of a "head-in-the-sand approach" to Brexit preparation.
"If there's one headline I hope comes out of this appearance today, it's to send another shot over traders' bows to warn them that is their businesses that are at stake from January 1 and they really must engage in a more energetic way," he told members of Parliament.
"The government can only do so much. If businesses haven't engaged in the process and understood the process from January 1, then that has to be their responsibility."
Dominic Goudie, the Food & Drink Federation's Head of International Trade, said "industry needs no reminder that time is desperately short."
He told Business Insider: "Businesses want to prepare and are getting on with it to the best of their ability, but this continues to be hampered by large gaps in essential information that can only be provided by UK Government.
"The FDF shared a list with the Government of 170 unanswered questions where businesses urgently need answers, many of which we have been asking repeatedly for more than a year. Even if we receive answers tomorrow, in many cases it will be too late for businesses to make the costly changes that may be required, including to product labelling and their supply chains.
"Time is running out for government to provide the answers that we need, and failure to do so presents significantly increased risks for shopper choice and affordability."
Carolyn Fairbairn, director-general of the Confederation of British Industry, on Tuesday, told the Institute for Government think tank that it would be "profoundly unfair" to blame businesses for a lack of readiness.
"It has been a very confusing picture for firms in terms of knowing what to prepare for," she said.