In Brief

UK businesses call for 2008-style ‘no deal’ Brexit bailout

Firms calls for state bailout similar to the financial crisis in order avoid wide-scale bankruptcies

British businesses have called for a 2008-style government bailout to avoid wide-scale bankruptcies in the event of a catastrophic no-deal Brexit.

With Theresa May’s Brexit plans hanging by a thread, the next 36 hours are seen as crucial for the negotiations.

Yet even if a deal agreed in principle can be sealed between the Cabinet and Brussels this week, it is far from certain that any agreement will be ratified by MPs in Westminster, meaning the UK could still leave with no deal at all, even though many among the business community say it is already too late to prepare adequately for it.

Speaking to Politico’s Charlie Cooper, Ian Wright, chief executive of the Food and Drink Federation, said “if the UK does fall over the Brexit cliff edge, ministers must leverage the government’s “financial muscle … in rather the way they did for the banks during the [2008] crash.”

“If the government was to say no [to that] now there would be a very big question from British industry: ‘You were prepared to fund the banks who brought the crisis on themselves… but you’re not prepared to support British business which is completely innocent of any fault in the current circumstances?’”

Despite repeated warnings about supply-chains, stockpiling and wide-spread disruption, the Institute of Directors, which represents business leaders, estimates only a third of its more than 30,000 members have done contingency planning for a no-deal Brexit.

While the consequences of a no-deal Brexit for the country as a whole have been widely report, not least in more than 100 “technical notices” published by the government over the summer, the impact on small and medium-sized businesses has received little attention.

The IoD’s Allie Renison said: “As long as it remains government policy to potentially walk away, it is incumbent on them to make further provision to help firms be fully ready for the consequences of that outcome.”

In the government's absence, banks and private financial intuitions stepped in to fill the void.

The Financial Times has reported that UK banks have been making practical preparations, including the setting up of new continental European subsidiaries or transferring operations.

Royal Bank of Scotland announced last month is has set aside £2 billion in funding to help SMEs deal with Brexit.

RBS said the cash would be used to provide services such as trade finance, term finance and increased liquidity for small businesses which rely on EU labour markets or exposure to foreign exchange movements.

With huge investment needed in staff, IT systems or outsourcing but continuing uncertainty about whether there will or won’t be a deal, Politico says “many have gambled on there being a deal rather than make an investment they can ill-afford”.

Recommended

Why the Bank of England is raising interest rates again
Andrew Bailey, the governor of the Bank of England
In Depth

Why the Bank of England is raising interest rates again

Eight unmissable business ideas for growth and modernisation
Woman and man standing in front of whiteboard covered in post-its. The woman is writing on the board with a marker.
Advertisement Feature

Eight unmissable business ideas for growth and modernisation

‘Kapow!’: why $90m Batgirl movie was axed
Leslie Grace as Batgirl
Talking point

‘Kapow!’: why $90m Batgirl movie was axed

Is a fresh conflict flaring up in Kosovo?
Nato soldiers serving in Kosovo patrol next to a road barricade set up by ethnic Serbs near the town of Zubin Potok
Fact file

Is a fresh conflict flaring up in Kosovo?

Popular articles

Will China invade Taiwan?
Chinese troops on mobile rocket launchers during a parade in Beijing
Fact file

Will China invade Taiwan?

Is World War Three on the cards?
Ukrainian soldiers patrol on the frontline in Zolote, Ukraine
In Depth

Is World War Three on the cards?

Best new TV crime dramas of 2022
Roger Allam and Nancy Carroll in Murder in Provence
In Depth

Best new TV crime dramas of 2022

The Week Footer Banner