Agents’ survey on preparations for EU withdrawal

The Agents surveyed almost 300 business contacts about their preparations for EU withdrawal between 29 January and 1 March. The results of this survey — referred to as the ‘March survey’ — are summarised in this box.

The March survey1 indicated that companies had stepped up their preparations for a ‘no deal, no transition Brexit’ and that their reported readiness for this scenario had improved compared with the previous survey in January.2

In March, around two thirds of respondents said that they had started implementing contingency plans — both agreed and in development — for a ‘no deal, no transition’ Brexit (Chart A). This compared with just under half of respondents in the January survey.

Chart A Contingency planning for a 'no deal, no transition' Brexit (a)

Chart A Contingency planning for a “no deal, no transition” Brexit
  • Notes
    (a) Companies were asked ‘How advanced is your contingency planning for a ‘no deal and no transition’ Brexit?’. The question asks about ‘plans for the end of March 2019’.

However, there was still a significant minority — just under a third of contacts — who were not making any plans. This was mostly because they did not think they would be affected by a ‘no deal, no transition’ Brexit, or were waiting for more clarity about potential outcomes.

The survey showed that businesses were taking a range of steps to mitigate risks from a ‘no deal, no transition’ Brexit (Charts B (i) and (ii)). Those steps included putting resource into Brexit planning, engaging with customers directly to manage risks and applying for certifications that may be needed to continue trading with the EU after Brexit.

Chart B (i) Type of contingency actions being undertaken or planned (a)

Chart B (i) Type of contingency actions being undertaken or planned
  • Notes
    (a) Respondents were asked what types of actions they had undertaken, were planning or were carrying out for the end of March 2019. They were asked to select all actions that applied from a range of options. As a result, the figures are not additive.

Chart B (ii) Type of contingency actions being undertaken or planned (a)

Chart B (ii) Type of contingency actions being undertaken or planned
  • Notes
    (a) Respondents were asked what types of actions they had undertaken, were planning or were carrying out for the end of March 2019. They were asked to select all actions that applied from a range of options. As a result, the figures are not additive.

Around two fifths of respondents said that they were stockbuilding, down slightly from the January survey. The scale of stockbuilding varied by sector as well as the size of the business and the size, nature and source of the components, materials or goods. 

Results from the January and March surveys suggested that manufacturers were most likely to be building inventories, with construction businesses least likely to be doing so. Wider agency intelligence suggests that contacts have been building inventories of up to three-times normal levels. 

The March survey suggested that as companies have increased contingency planning for a ‘no deal, no transition’ Brexit, their reported readiness for this scenario has also increased. 

The March survey showed that around 80% of companies judged themselves ‘ready’ for a ‘no deal, no transition’ Brexit scenario, compared with around 50% of companies in the January survey.

Nevertheless, many companies reported that there were limits to the degree of readiness that was feasible in the face of the range of possible outcomes in that scenario. These included issues relating to tariffs, border frictions, exchange rate movements and recognition of certifications — which many companies felt were outside their control. 

Indeed, the March survey also showed that respondents — even those that felt ‘ready’ — still expected output, employment and investment over the next 12 months to be significantly weaker under a ‘no deal, no transition’ Brexit than under a ‘deal’ scenario.

On average, companies expected output and employment to fall, though to a lesser extent in March than in the January and December surveys (Chart C (i)). Investment in the UK was expected to fall more sharply in the March survey than in the previous surveys. The differences between the survey results may be partly due to sampling issues.

Chart C (i) Expectations for the impact on business of Brexit (a)

Chart C (i) Expectations for the impact on business of Brexit
  • Notes

    (a) Companies were asked ‘Relative to the last 12 months, what is the likely impact on the following for your business over the next year in each scenario: (a) a deal and transition period and (b) no deal and no deal and no transition period?’. For each relevant business factor, respondents were asked to choose between ‘Fall greater than 10%’; ‘-10 to -2%’; ‘Little change’; ‘+2 to +10%’ and ‘Rise greater than 10%’.

    (b) Net percentage balances of companies reporting increases or declines in each factor, weighted by employment. Half weight was given to the +/-2%–10% response and full weight was given to those that responded ‘Rise/Fall greater than 10%’.

Chart C (ii) Expectations for the impact on business of Brexit (a)

Chart C (ii) Expectations for the impact on business of Brexit
  • Notes

    (a) Companies were asked ‘Relative to the last 12 months, what is the likely impact on the following for your business over the next year in each scenario: (a) a deal and transition period and (b) no deal and no deal and no transition period?’. For each relevant business factor, respondents were asked to choose between ‘Fall greater than 10%’; ‘-10 to -2%’; ‘Little change’; ‘+2 to +10%’ and ‘Rise greater than 10%’.

    (b) Net percentage balances of companies reporting increases or declines in each factor, weighted by employment. Half weight was given to the +/-2%–10% response and full weight was given to those that responded ‘Rise/Fall greater than 10%’.

  • Footnotes

    1 The survey was conducted between 29 January and 1 March 2019. There were 286 responses from companies with 373,000 employees and with a combined turnover of £127 billion. Responses were weighted by employment and then by sector.

    2 The January survey was conducted between 17 December 2018 and 28 January 2019. The results were published in the ‘Agents’ update on business conditions’ in the February Inflation Report. Results from the December 2018 vintage of the survey were published on 4 December 2018 in the ‘Agents’ survey on preparations for EU withdrawal’.

This page was last updated 03 May 2019
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