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Business chiefs warn Boris Johnson UK not ready for no-deal Brexit

Britain is still “underprepared” for a no-deal Brexit in October, a major business lobby group has warned Boris Johnson.

In a new report, the CBI – which represents 190,000 UK businesses – said firms had been undermined by unclear advice, cost and timelines on what leaving the EU without a deal would mean.

And they make clear that the European Union itself is also not ready for a no-deal outcome.

The warnings came as it was reported that the Government is planning a £100m no-deal advertising blitz over the next three months, as Mr Johnson ordered a shake-up of Whitehall to ready the UK to leave without an agreement on 31 October.

In its new report, the CBI says 24 out of 27 areas of the UK economy will face disruption if the country leaves the EU without a deal, and it calls on ministers to “step up” preparations for a hard exit.

The CBI calls on the Government to “immediately” put the civil service “back onto a no-deal footing” and review all Brexit preparedness advice drawn up for the previous exit date of March 2019.

The Government should meanwhile launch a “targeted” communications campaign and adopt a “refreshed, transparent” approach to its planning, the CBI says.

Ministers are also urged to consider shortening the summer Parliamentary recess and curtailing party conferences to allow enough time to pass vital no-deal Brexit legislation.

Meanwhile the EU is told to “come to the table and commit” to matching the “sensible” planning already carried out by the UK.

‘DAMAGE’

The CBI’s deputy-director general Josh Hardie said: “Businesses are desperate to move beyond Brexit. They have huge belief in the UK and getting a deal will open many doors that have been closed by uncertainty.

“There is a fresh opportunity to show a new spirit of pragmatism and flexibility. Both sides are underprepared, so it’s in all our interests. It cannot be beyond the wit of the continent’s greatest negotiators to find a way through and agree a deal.

“But until this becomes a reality, all must prepare to leave without one. It’s time to review outdated technical notices; launch an ambitious communications campaign for every firm in the country and rigorously test all Government plans and IT systems.”

While the CBI is urging businesses and government to do all they can to prepare for a no-ldea, Mr Hardie warned that neither side of the negotiations could completely “mitigate” the disruption of Britain leaving without a deal.

“We can reduce but not remove the damage of no-deal,” he said.

“It’s not just about queues at ports; the invisible impact of severing services trade overnight would harm firms across the country.”

The CBI’s warning came as The Telegraph reported that Mr Johnson is planning to channel £100m into a no-deal spending advertising blitz over the next three months.

The push could include a leaflet on no-deal preparations being sent to every home in the country.

According to the paper, Chancellor Sajid Javid will unveil wider plans for an extra £1bn in no-deal prepartion spending later this week.

Mr Johnson has meanwhile set up a new “exit strategy committee” in Whitehall to lead on Brexit planning, The Times reports, with Cabinet Office minister Michael Gove heading up a new “operations committee” that will meet daily and lead on no-deal work.

Written by: Matt Honeycombe-Foster

Source: Politics Home

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UK business optimism plummets

Growth expectations among UK businesses has fallen to 49%, from 69% last year

Among private businesses in the UK, optimism is rapidly diminishing, according to new research from PwC. It is falling at more than twice the rate of European counterparts.

PwC polled 2,400 organisations in 31 countries for its European Private Business Survey. Among the 220 UK firms, growth expectations fell to less than half, having been at 69% last year.

Although growth expectations among the other countries also fell, it was by only 8%, from 65% in 2018 to 57% now.

The survey also revealed that across Europe, businesses are facing a widening skills gap. In the UK, PwC estimates, the lack of appropriate skill costs an annual £29bn in lost revenue.

Brexit also remains a concern for businesses. Suzi Woolfson, PwC’s UK private business leader, pointed out that “until there is some certainty around it, businesses will continue to tread carefully.”

Woolfson also highlighted the possibilities that come from uncertainty, “those companies that are agile and flexible can benefit enormously”, she said.

Commenting on the skills shortage that the survey threw light on, she said, “Across Europe we are seeing a skills shortage becoming a significant issue for private businesses and in the UK, while companies say the problem is improving in comparison to last year, overall the impact is still significant”.

UK private businesses are more open than those in Europe to funding from private equity or venture capital for digitalisation, the survey found.

Woolfson said, “Our survey shows that UK private businesses recognise the importance of technology to their long term aspirations, which is why it is important to invest in technology and data to ensure real commercial improvements in systems and processes.

“With their ability to be nimble and decisive, private companies are well-placed to make strategic investments which can lead to substantial benefits”, she added.

By Frances Ball

Source: Economia

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UK business output growth falls for first time in 2019

UK business output growth has declined for the first time this year.

BDO’s Output Index, which measures UK business output growth, fell to 98.63 in April from 98.74 in March.

Business confidence also registered another decline in April, slipping by 0.36 points to 95.74 – the lowest level the index has been since 2012.

As the imminent threat of a no-deal Brexit was lifted last month, activity in the manufacturing sector is expected to diminish due to unprecedented levels of stockpiling tailing off.

BDO’s Manufacturing Output Index, which tracks output growth in the sector, declined to 97.27 in April. This marks a year-on-year decrease of 8.32 points and compares to its most recent high of 103.26 in September 2018.

In further gloomy news for the manufacturing industry, confidence has hit a 30-month low.

BDO’s Manufacturing Optimism Index, which shows how businesses expect output to develop in the next three to six months, declined to 101.09 in April from 103.73 in March. The index has not been this low since November 2016 and reflects concerns by manufacturers that they expect growth to moderate in the coming months.

Optimism in the UK’s services sector fell for a ninth consecutive month after it plummeted by 4.15 points in March. The index shows that optimism dropped to 95.06, just 0.06 points off negative territory. Despite the extension of Article 50 until October, businesses still don’t have the clarity they desperately need on the future long-term relationship the UK will have with the EU.

Peter Hemington, partner at BDO, said: “The only certainty businesses have at the moment is that the UK government still doesn’t know exactly how or when the UK will leave the European Union. We are seeing the impact of this confusion, with business confidence plummeting.

“An extension of Article 50 alone is insufficient to restore sentiment among businesses. In the coming months, the government should look at further policy interventions, such as increasing the Annual Investment Allowance, to help businesses invest and stimulate the UK economy.”

By Rachel Covill

Source: The Business Desk

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North ranked as number one UK region for business growth

THE north has been ranked as the number one UK region for business growth, according to a new report.

Research released by equity investor, BGF shows that 400 top performing companies in Northern Ireland have reported a combined £1.4 billion of turnover growth in the last three years.

The UK-wide analysis, which covers a total of 13,286 businesses, calculates growth through changes in turnover and employee size among private companies with revenues between £3m and £150m.

In the north, four in five (81 per cent) of the 400 firms within the classification increased their revenues over the last three years, the highest proportion in the UK.

Collectively, the local companies enjoyed turnover growth of 17 per cent since 2015, marginally above the UK average (15 per cent).

Suprisingly businesses in Co Derry experienced the UK’s highest combined turnover growth in the UK of 26 per cent over the past three years, with 84 per cent of the 45 businesses covered in the research reporting an increase.

The research further shows that over two thirds (71 per cent) of Northern Ireland businesses are actively hiring and have increasing their combined workforce by an average of 25 people per week (3,918 employees) over the past four years – the sharpest rate in the UK.

Paddy Graham, head of Northern Ireland at BGF said local businesses have prospered in spite of the clear challenges in front of them.

“Over the past three years, Northern Ireland businesses have faced a lot of uncertainty, with unresolved issues such as Brexit and the restoration of local government at Stormont undoubtedly having some impact on overall growth in the economy,” he said.

“But this research shows a group of businesses here which have not just grown strongly but have actually outstripped their peers in other regions of the UK. While the numbers of local businesses in our target range is relatively low compared to some other UK regions, it is hugely positive that so many of them are posting such robust financial numbers.”

Source: Irish News

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Brexit is wrecking Britain’s business reputation – Siemens UK head

Britain is wrecking its reputation for business stability with political divisions over Brexit and risks leaving the trading bloc with a hugely damaging “no-deal”, the UK head of German industrial giant Siemens has said.

After Prime Minister Theresa May’s Brexit deal was rejected by parliament for a third time last week there is pressure from rival factions for a no-deal exit, a much softer divorce or an election.

“Where the UK used to be beacon for stability, we are now becoming a laughing stock,” Juergen Maier said in open letter to lawmakers published by website Politico.

“It has been clear for weeks, that the only way that this will be resolved is through compromise between the government and parliament,” Maier said, calling for a softer Brexit.

Maier said it was becoming hard for him to win support from his board for investment decisions as Britain heads towards a “hugely damaging no-deal Brexit.”

“Enough is enough. We are all running out of patience. Make a decision and unite around a customs union compromise that delivers economic security and stability,” he said.

In year to September 2018, Siemens UK generated revenue of 5 billion pounds, the company’s website said. At the end of September 2018, the company had 15,000 employees in Britain.

Reporting by Elisabeth O’Leary. Editing by Jane Merriman

Source: UK Reuters

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Business confidence surges in East Midlands

Business confidence in the East Midlands surged by 15 points in March, according to new figures.

Confidence grew to 18 per cent, making it the second most confident region in the UK, according to the latest Business Barometer report from Lloyds Bank Commercial Banking.

Companies in the region surveyed between 1 and 15 March 2019 reported higher levels of confidence in their own trading prospects, with a net balance of 29 per cent of firms expecting business activity to increase over the next 12 months, compared with 21 per cent last month.

Businesses economic optimism jumped 20 points to stand at seven per cent. When taken together, these two figures give an overall confidence of 18 per cent.

A growing number of companies are also looking to recruit new staff, with a net balance of 28 per cent planning to recruit over the next 12 months, compared with 10 per cent a month ago.

Across the UK, overall confidence climbed six points to 10 per cent as both firms’ optimism about the economy and confidence in their own prospects bounced back from February’s lows.

The Lloyds Bank Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “This month’s Business Barometer shows that East Midlands businesses are among the most confident in the whole of the UK.

“This reflects what we’re seeing first hand in the region, where ambitious and driven firms are continuing to invest, innovate and expand.

“We’re by the side of businesses across the East Midlands, and as part of our commitment to helping them succeed, we’ve pledged to lend up to £2.5bn to East Midlands businesses during 2019.”

By Jon Robinson

Source: Insider Media

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UK firms report weakest growth since April 2013: CBI

British businesses reported their weakest growth in nearly six years during the past three months due to fears of a no-deal Brexit and rising global trade barriers, the Confederation of British Industry said on Sunday.

The CBI’s index of private-sector activity over the past three months dropped to -3 in February from zero in January.

This was its lowest since April 2013, when Britain was still recovering from the global financial crisis. Firms expected similar weakness in the three months ahead, when Britain is due to leave the European Union after over 40 years of membership.

Prime Minister Theresa May has yet to win parliament’s support for a Brexit transition deal although she has paved the way for a possible delay to Brexit beyond its scheduled date of March 29.

“More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic,” the CBI’s chief economist, Rain Newton-Smith, said.

A survey last week showed manufacturers stockpiled goods by the most on record for any big advanced economy as they prepared for the possibility of border delays after Brexit.

The Bank of England predicts Britain’s economy will grow by just 0.2 percent in the three months to March and growth in 2019 to be the weakest since 2009, even if Brexit goes smoothly.

Britain’s trading partners in Europe are facing weaker growth too, due to trade tensions between the United States and China that have hurt global manufacturers.

The CBI survey was based on responses from 650 businesses in retail, manufacturing and services.

Source: UK Reuters

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No-deal Brexit would lead to food shortages and cost business billions, government reveals

A no-deal Brexit would lead to food shortages, higher prices in the shops and cost UK firms billions of pounds, a new analysis from the Government has revealed.

Ministers also admitted that up to a third of “critical” infrastructure projects were now behind schedule, partly due to firms failing to view a no-deal scenario as “sufficiently credible”.

Members of the public are also failing to prepare for a no-deal Brexit, according to the 15-page document, which warned that industries like the automotive sector would be “severely” impacted by new tariff and non-tarriff barriers if the Commons does not back the Withdrawal Agreement negotiated by Theresa May.

“In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario. As of February 2019, many businesses in the food supply industry are unprepared for a no deal scenario.”

The stark analysis warned that harsh new customs arrangements would be implemented if the UK is treated as a third country by the EU in the event that no managed exit is agreed between London and Brussels.

“Every consignment would require a customs declaration, and so around 240,000 UK businesses that currently only trade with the EU would need to interact with customs processes for the first time, should they continue to trade with the EU,” they wrote.

“HMRC has estimated that the administrative burden on businesses from customs declarations alone, on current (2016) UK-EU trade in goods could be around £13bn pa.”

On Whitehall’s preparedness, the document said: “In February, departments reported being on track for just under 85 per cent of no deal projects but, within that, on track for just over two-thirds of the most critical projects.”

According to a Government survey, 55% of British adults did not expect to be impacted by a no-deal Brexit.

They added: “Despite communications from the Government, there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low.”.

The study also warned that consumers would be hit by rising food prices and shortages due to a “very significant reduction” in the amount of goods able to pass through the Channel crossings which the government say could last for months.

Downing Street had been initially reluctant to release the report but was forced into publishing it after a Commons vote.

The warnings come just hours after Theresa May vowed to give MPs a vote on whether they would be willing to accept a no-deal Brexit or a delay to Article 50 if she is unable to secure their backing for her deal.

She added: “If we have to, we will ultimately make a success of a no-deal.”

Responding to the report, Labour MP Martin Whitfield of the Best for Britain campaign, said: “These are truly shocking admissions by a government looking to abdicate responsibility for the oncoming chaos.

“We’ve known for a while that businesses aren’t ready for Brexit and that it’s disrupting their work already – big or small. Now we know a third of the most critical government projects aren’t ready, while the economy is due to shrink. The government has full ownership of this mess.”

Source: Politics Home

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Business impact of no deal Brexit on each region of UK revealed – CBI

The CBI has set out the impact of a ‘no deal’ Brexit on business, across every region and nation across the United Kingdom.

The analysis of government figures underlines the importance of no deal being taken off the table to prevent economic fallout and protect jobs and living standards.

Following last week’s Brexit vote, where the Prime Minister’s deal was defeated, Theresa May gave a statement in the House of Commons on Monday outlining the government’s next steps on Brexit.

Responding to the vote and the statement, the CBI has been clear that a March no deal must be taken off the table. This was backed up with CBI’s fresh analysis on the long-term economic impact of a ‘no deal’ Brexit which included over 40 real-world case studies of companies in every UK region outlining why no deal would be so damaging for their business. Shared concerns include border delays destroying carefully built supply chains and extra costs and tariffs damaging competitiveness.

Read CBI’s latest no deal regional analysis here.

While taking a March no deal off the table would provide some much-needed respite for many businesses, it is clear that the Brexit deadlock will only be broken by a genuine attempt by all MPs to find consensus and compromise. Next week will see MPs debate a series of amendments in response to the Prime Minister’s statement on the government next steps on Brexit, including proposals to rule out a March no deal. Those amendments selected by the speaker on Tuesday 29thJanuary will be voted on by MPs later that evening.  Following the vote, the CBI will be consulting its Chairs Committee on Wednesday to help inform next steps.

Source: PES Media

International Trade
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Why UK Businesses Need to Trade Internationally – The Key Benefits of International Trade for UK SMEs

The Key Benefits of International Trade for UK SMEs – As a business, you’re always trying to find and break new grounds to gain that competitive edge. But, have you considered going global yet?

The history of the world as we know it has been shaped by a complex concoction of ideas, events and people.

But there has always been a strong, undeniable driving force behind much of the development we’ve seen in the post-industrial revolution era: natural resources. The quest for the very best of everything that our planet has to offer has built, transformed and even destroyed civilisations, and international trade is a vibrant reminder of that fact.

Today, no country can afford to sit back and not engage in international trade. Many of Western economic policies stem directly from trade-related reasons and thousands if not tens of thousands of companies in the UK keep the wheel of our international trade turning.

But while all this happens, what does international trade mean for you and your business?

In the more-connected-than-ever world, you can’t possibly afford to ignore the possibilities that exist around the world. If you’ve been apprehensive about the seemingly complex international trade puzzle, let us break some things down for you.

Before that, let’s take stock of where things stand from an SME point of view.

More and More SMEs Are Trading Internationally

Thanks to consistent efforts of successive governments, international trade has seen some promising numbers in the last few years.

Although there has been a marked drop in overall exports in the past two years due to puzzling developments and speculations around Brexit, the overall number of SMEs exporting internationally has increased. The latest figures released by the government indicate that the number of SMEs exporting products and services internationally rose in 2017 by 6.6%.

“With more and more SMEs engaging in international trade (especially exports), it’s clear that it’s indeed possible even for a small business without millions of pounds in cash reserves to expand their operations, customer base and influence around the world with success.”

At 235,000 and counting, the SMEs trading internationally account nearly for 10% of all SMEs in the UK.

Benefits of International Trade for UK SMEs

While there can be cited dozens of benefits of international trade, here are the important ones that UK SMEs need to know:

A. International Trade Allows for the Diversification of Operations

It’s probably the most apparent benefit of going global for SMEs.

As a business trading internationally, you can easily diversify many of your business operations. This includes the two end-points of business – paying customers and suppliers whom you pay. You can access diverse technologies, market opportunities, natural resources and human resources, and make them all work in your favour.

B. Diverse Operations = Better Risk Tolerance

Risk tolerance is a business metric that defines how much of a leeway a business can have against various risks – from market events to uncontrollables like natural calamities.

When you start trading globally, your business automatically spreads much of its risks over a wider geographic area. Of course, this comes with additional trading risks, but they usually offset themselves with associated rewards. Essentially, businesses that import/export can tolerate negative events without sustaining much damage, as opposed to domestic businesses that can suffer irreversible damage.

For example, an unfortunate event like an earthquake can bring your manufacturing operations and domestic demand to a standstill. But if you export the manufactured goods internationally, you can still move the surplus inventory off your warehouses, maintaining the incomings relatively unscathed.

C. Trading Internationally Opens Up New Channels of Revenue

It’s no secret that you can’t have every type of demand in a single market. If you trade only domestically, your operations will always be limited to a certain type of demand. Any fluctuations in those demand forces will have a direct impact on the revenue.

Alternatively, when you trade globally, you can add multiple, previously-untapped revenue channels to your operations. This is just an extension of the previous risk tolerance argument we made, but it’s definitely one of the highlights UK SMEs need to think about.

D. International Trade Isn’t Crippled By Finance Bottlenecks Anymore

The second half of the 20th century was marked by epochal turns. The World War II started a chain of events that was propagated further by the Cold War, followed by the oil-centric upheavals in the Middle East. All these events meant one thing – the money gradually dried up from all international trade that wasn’t related to oil.

Lenders were unwilling to deal with foreign suppliers or banks, making letters of credit an irrelevant option for businesses. Today, we are glad to report, this isn’t the case.

Even a small business with limited capital can easily have letters of credit issued to the supplier’s bank without any problems. Thanks to the good perception UK businesses have in foreign markets, there are fewer things to worry about today than ever. If you’re exporting goods or services, you can just as easily arrange for flexible finance packages that keep the operations running smoothly.

When it comes to trade finance, Commercial Finance Network is an automatic choice for hundreds of UK SMEs. Being an industry-leading whole of market broker, we help UK SMEs access a diverse panel of lenders who bring on board decades of global trade experience. High acceptance rates, customised loan terms and fast approvals are just some of the features that make our trade finance services popular among businesses across the UK.

E. You Can Easily Beat Domestic Competition

Trading internationally means trading on a bigger and wider canvas. By going global, you can make sure that your business has an edge over domestic competitors.

F. A New Lease of Life for the Service Industry

Service provider businesses are among the fastest growing businesses of the 21st century, thanks largely to the internet effect. Given that the UK is one of the most important financial markets of the world, it’s no wonder that UK service providers – especially in the technology, financial and education sectors – have been reaping the rewards of trading internationally.

If you run a service business, you can – at relatively lower cost spreads – access and seize foreign markets.

G. Trading Internationally Promotes Innovation

Innovations isn’t just a buzz word – it’s the primary catalyst for business growth today.

If your business operates in tech, manufacturing or financial sectors, you know this first-hand. Innovation in a far-away market can often have an tearaway effect on your local performance. In such times, it pays to be connected to the world at large – something trading internationally lets you do.

Explore the World of Opportunities With Commercial Finance Network

Whether it’s sourcing better, cheaper equipment from overseas suppliers or exporting goods/services to foreign customers, every well-thought-out international trade move can be a game changer for your business.

At Commercial Finance Network, we help UK SMEs realise their global trading goals with robust, flexible and customised trade finance solutions – from affordable import-export finance to universal letters of credit. Let us worry about mediating with foreign banks and suppliers while you focus on your business.

To request a quote or talk to our trade finance experts, click here.