The Confederation of British Industry (CBI) has warned the government that neither the UK nor the EU is ready for a no-deal Brexit on 31 October.
“While the UK’s preparations to date are welcome, the unprecedented nature of Brexit means some aspects cannot be mitigated,” said the CBI.
It has published practical steps it says the UK, EU and firms can take.
A government spokesman said the UK has increased the pace of planning for no-deal.
The CBI had previously said leaving the EU with a deal was essential to protect the economy and jobs.
New Prime Minister Boris Johnson has made Michael Gove responsible for planning a no-deal Brexit.
Mr Gove has said the UK government is currently “working on the assumption” of a no-deal Brexit.
He said his team still aimed to come to an agreement with Brussels but, writing in the Sunday Times, he added: “No deal is now a very real prospect.”
The CBI’s report What Comes Next? The Business Analysis Of No Deal Preparations advises what measures businesses can take to reduce the worst effects.
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The advice is based on a study of existing plans laid out by the UK government, European Commission, member states and firms.
“And although businesses have already spent billions on contingency planning for no deal, they remain hampered by unclear advice, timelines, cost and complexity,” the CBI says.
“Larger companies, particularly those in regulated areas such as financial services, have well-thought-through contingency plans in place, though smaller firms are less well prepared.”
The report is based on thousands of interviews with firms of all sizes and sectors, including 50 trade associations, covering all areas of the UK economy.
The CBI says that in a no-deal Brexit some 24 of 27 areas of the UK economy would experience disruption.
Speaking to the BBC’s Today programme, Josh Hardie, the CBI’s deputy director general, said: “A deal is absolutely essential if we’re to manage the economy in the best way that we can.”
But he said preparing for a no-deal scenario did not mark a change in tack for the CBI, which campaigned to remain in the EU and then backed Theresa May’s proposed deal.
“If you see a storm coming, you put down the sandbags,” he said. “It doesn’t mean you’re going to stop all the flood water, you’ll probably still lose the kitchen but you might save the bedroom and that’s where we are right now.”
He said meetings between businesses and the government needed to “scale up – and they have to scale up now”. He said that talks about no-deal preparations had been postponed since an initial March deadline to leave the EU was delayed until 31 October.
The UK had been due to leave the EU on 29 March, but former Prime Minister Theresa May asked for an extension and the date was pushed back to 31 October.
A UK government spokesperson said: “This is a constructive contribution from the CBI, acknowledging the importance of all businesses preparing for no deal on the 31 October.
“While we have done more to prepare than this report implies, since the new prime minister was appointed the government has stepped up the pace of planning for no deal. The chancellor has confirmed all necessary funding will be made available for vital no deal preparations. This includes funding for a major nationwide communications campaign to ensure that people and businesses are ready.
“Crucially, while there is more to do, the CBI observes that the UK is ahead of the EU in planning for no deal.”
CBI: ‘UK and EU not ready for no-deal Brexit’ – BBC News