UK businesses have said they fear the risks from a second wave of COVID far more than a no deal Brexit.
Accountancy and business advisory firm BDO has polled 500 mid-size UK business leaders on their fears for the months to come and their preparedness for Britain leaving the European Union on 31 December 2020.
The study found the UK’s mid-sized businesses, responsible for one third of UK jobs and £1.4 trillion in revenues, risk having their Brexit plans side-lined as they deal with a second wave of COVID-19.
The third Rethinking the Economy poll found only one third of businesses have “adapting my business for Brexit” in their top immediate business concerns and instead are focused on making loan payments (37%) and managing redundancies (36%). Just over a third (36%) did cite managing supply chains as an immediate top priority, an issue likely to be made more complex by the imminent prospect of a no-deal Brexit.
The research also shows that the majority of medium-sized business see a domestic second wave of COVID-19 as a greater risk than a no-deal Brexit for both their businesses (66.5%) and the wider UK economy (61%). This sentiment is echoed by businesses throughout the UK, with Greater London (87%), the South East and the West Midlands (74%) the most concerned about a second wave.
The Central South was the only region to buck the trend, with 83% of businesses citing Brexit as a bigger threat to the economy.
Commenting on the results, BDO’s managing partner, Paul Eagland, said: “Businesses are facing two major challenges and remain in survival mode. COVID-19 has pushed many of these businesses to rethink their operations, with almost a third still making changes to their businesses as a result of the pandemic. The uncertainty around the virus, coupled with the complexities a no-deal Brexit could bring before the end of the year, leaves business leaders spinning a number of plates.”
Looking ahead, sentiment around recovery is slightly more positive. Over the next six months, 41% of medium-sized businesses plan to make investments particularly in technology, and 40% plan to hire graduates or apprentices.
“Despite COVID-19 derailing some plans and sparking debate around the Government’s regional ‘levelling up agenda’, the majority of mid-sized businesses (86%) are still hopeful that progress will be made over the next three years,” and Mr Eagland. “History teaches us that medium-sized businesses will play an important role in the UK’s economic recovery. Early signs of investment and employment are heartening and bode well for the economy.
“However, as Brexit negotiations come to a close, it is important these businesses, particularly in the sectors and regions disproportionately impacted, receive the right information and financial backing from the Government to support them through another rocky period.”