A new survey that was released by KPMG and the British Chamber of Commerce in Germany today revealed that 47 percent of firms in Germany have not yet conducted a Brexit risk assessment nor made some measures to prepare for Brexit as of the beginning of the year.
101 firms participated in a survey that was conducted by the German British Business Outlook 2019. It included both German firms that have subsidiaries in the United Kingdom and Britsh subsidiaries in Germany. Germany is considered as the second-largest trading partner of the United Kingdom with bilateral trade amounting to €180 billion (£156 billion, $202bn) in 2017. Of the firms who have made some Brexit preparations, approximately 60 percent have adapted their admin processes and more than half have established a special Brexit task force.
Today, KPMG’s Andreas Glunz informed journalists in Berlin that firms were not able to make preparations for Brexit primarily due to the impossibility of knowing exactly how Brexit was going to play out. According to the survey, most of the firms considered a Brexit delay with a second referendum or a hard Brexit to be the most likely scenarios.
Glunz stated: “When all scenarios seem possible, businesses cannot prepare for all of them simultaneously.”
He added: “That’s nigh on impossible, especially for small-to-medium sized entities.”
He noted that there was no clarity regarding what EU exit deal of the United Kingdom might look like when the referendum first passed two years ago, and it was exactly the same two months ago. The main difference is that the firms are now threatened with a “cliff edge” situation.
The survey discovered that 40 percent of business owners expect that Brexit will have a big or massive negative effect on their businesses, and more than half expect a moderate-to-small impact. KPMG noted that these statistics are pretty much the same as that a year ago.
The main areas where the companies expect to feel the pain from Brexit are in administrative burdens, as well as services and sales volumes. They also anticipate seeing a negative effect from customs and trade costs, exchange rates, and supply chain disruption.
Other findings included that 84 percent of firms expect that the British economy will decline. More than one-third of the respondents said that they will revise their investment plans if it comes to a hard Brexit.