Fewer than one in five small UK firms have prepared for the end of the transition period

From: RegTech Analyst

With less than two weeks until the Brexit transition period ends on December 31, new research has revealed that only 18% of small businesses have prepared for the UK’s divorce from the EU.

The new research from the Federation of Small Businesses (FSB) also unearthed uncertainty among British firms about future trade arrangements and Covid-linked disruption hampering efforts to prepare.

Having surveyed 1,500 firms, the FSB found that of those that have taken steps to prepare for Brexit, one in four have spent more than £2,000 on doing so, which is particularly worrisome as that figure stood at 21% in September 2019.

Of the firms polled, 68% cited uncertainty about what the relationship would be like between the UK and the EU as a barrier to trade.

And it seems as if Covid-19 has held back a lot of firms from making those preparations, with 22% citing a lack of time and resources as reasons behind their inability to prepare.

Of those that have made some preparations, 27% said the cost of doing so has been in excess of £2,000 and 10% said the cost has exceeded £5,000.

“With only two weeks to go, small firms don’t have the time, money or clarity they need to prepare for the end of the transition period even if they want or need to,” said Mike Cherry, chairman of the FSB. “More than four years on from the referendum, and after such a torrid 2020, we urgently need to see negotiators strike a pro-enterprise free trade agreement in the days ahead, one that includes an ambitious small business chapter.

“Fundamentally, if the government wants firms to make additional preparations over the coming days and into the New Year, it needs to put its money where its mouth is. Transition vouchers – £3,000 grants that firms can use to buy the tech, training and advice needed to navigate a new trading relationship – would make a massive difference.

“The fact that so few small firms that trade with Europe are familiar with rules of origin requirements is deeply concerning, and highlights the need to phase in implementation of changes across some of these more technical areas. The clock is ticking more loudly than ever before. It’s time for negotiators on both sides to get a free trade deal done.”

The news comes after the Financial Conduct Authority (FCA) warned UK firms in early December to prepare for Brexit as what the country’s future relationship with the EU was still up in the air.

The UK government’s inability to reach a timely trade deal with the EU has also created fear among the nation’s FinTech and RegTech companies as they are concerned about the country’s ability to remain a hub for innovation in these sectors past Brexit.

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