LONDON (Reuters) - Barely more than one in 10 British companies has started to put Brexit contingency plans into effect as many firms remain unclear about what leaving the European Union will mean, a leading business organisation said on Thursday.
The warning from the Institute of Directors comes as academics said separately that there would be “widespread, damaging and pervasive” costs if Britain failed to reach at least a transitional trade deal with the EU before it leaves.
The IoD said 11 percent of its members had begun implementing Brexit contingency plans while 30 percent were considering their options but had yet to act, less than two years before Britain is scheduled to leave the EU.
“Some changes and costs are inevitable ... but the more information the government can provide on the process of Brexit, the more companies will be reassured they do not have to jump to relocate staff or operations,” IoD Director General Stephen Martin said.
A third of the nearly 1,000 firms that took part in the IoD survey this month said they expected to do no Brexit planning.
Britain started full Brexit talks on Monday but Prime Minister Theresa May’s government is split over how much it should focus on minimising the disruption of leaving the EU for businesses or prioritise other goals such as asserting the supremacy of British courts and migration controls.
Major banks have started to move staff from London and the policy chief of the city’s financial district told Reuters recently that Britain must negotiate a staggered departure from the EU in the next few months or risk seeing thousands of finance jobs move overseas.
Anand Menon, a politics professor at King’s College London who directs a research group into Brexit, said a failure to reach a deal with the EU would be highly costly.
Nuclear plants might be unable to operate, airlines might be unable to fly and businesses would find it hard to enforce contracts without a deal, the group, UK in a Changing Europe, said.
“Our findings show a chaotic Brexit would, at least in the short term, spawn a political mess, a legal morass and an economic disaster,” Menon said.
Credit ratings agency Moody’s said on Tuesday that ports and airports could face “dramatic” restrictions without a deal.
Britain’s government says it is confident it will reach an agreement but has not ruled out abandoning talks if it believes the EU is seeking to inflict long-term damage on Britain.
Reporting by David Milliken; Editing by William Schomberg/Jeremy Gaunt