Three in four businesses are concerned about a further economic shock arising from a non-negotiated exit from the EU - the UK’s biggest trading partner - according to new survey data from the CBI.

Of 752 firms surveyed between 25 June and 15 July, one third said they were very concerned by the prospect of exiting the EU without a trade agreement, with 42% saying they were moderately concerned.

Informal talks between the two sides continued this week following the latest negotiating round. Though disagreement remains over issues including fisheries, fair competition provisions and financial services, progress has been made amid the challenges of the pandemic. The UK Government has set out details of its Border Operating Model, while the EU appreciates why a role for the European Court of Justice would hamper further headway.

The CBI survey also reveals that business preparations for the end of the transition period have stalled or gone into reverse since January.

• 15% of businesses report that they have improved their preparedness for the UK’s exit from the Single Market and Customs Union since January
• 58% of firms report no change in their level of preparedness,
• 21% report preparations going backwards since January, rising to 27% for manufacturers (See notes to Editors for sector breakdowns and full survey data)

Dame Carolyn Fairbairn, CBI Director-General, said:

"Recent progress shows what’s possible in these vital negotiations, despite the challenge of the pandemic. An ambitious deal with the EU is essential to shield firms from a further trade shock at a time when they are least equipped to cope.

"What’s clear from this wide-ranging survey is that the majority of firms have neither the time nor resources to prepare for a non-negotiated EU exit.

“While many larger firms have long had plans in place for a no-deal outcome, smaller firms will struggle to cope with a double dose of disruption. The same is true across the Channel, with EU companies’ preparations also hit hard by the pandemic.

“Businesses on both sides are desperate for a deal that protects their economies at this most precarious of times.

“A deal that supports the UK’s world leading services firms and keeps UK exporters free from red tape, costs and new trade barriers is paramount as the UK takes its all-important steps towards recovery.”

Notes to Editors

The Brexit preparedness questions were included in the CBI’s regular cycle of monthly business surveys in July. The responses have been weighted by firm and sector size, to ensure that the results are representative of the composition of the UK economy. This is line with the weighting methodology employed across the CBI’s regular business surveys.

The UK Government’s Border Operating Model details arrangements between Great Britain and the European Union. Further details are awaited on the Northern Ireland Protocol.

Details below:

The UK is due to exit the EU’s Single Market and Customs Union at the end of this year.

In light of the COVID-19 pandemic, how have preparations within your business for this changed since January 2020?

The UK and the EU are in the process of negotiating a trade deal, to come into effect from January 2021.

In light of your overall level of preparedness, and given that details of a trade deal have not yet been finalised, how concerned are you about the UK’s transition period coming to an end in December 2020?

The CBI’s July surveys were conducted between 25th June and 15th July

752 businesses responded.

All results are % of respondents, unless otherwise stated

Sector breakdowns:

The UK is due to exit the EU’s Single Market and Customs Union at the end of this year.

In light of the COVID-19 pandemic, how have preparations within your business for this changed since January 2020?

The UK and the EU are in the process of negotiating a trade deal, to come into effect from January 2021.

In light of your overall level of preparedness, and given that details of a trade deal have not yet been finalised, how concerned are you about the UK’s transition period coming to an end in December 2020?

The CBI’s July surveys were conducted between 25th June and 15th July

752 businesses responded.

All results are % of respondents, unless otherwise stated.

Distribution includes retail, wholesale and motor trades.

Services includes private sector consumer services and business & professional services.