Half of EU27 business have reduced investment in the UK and seen disruption to their supply chains resulting from the Brexit vote, the Survey of 800 EU27 business leaders from Baker McKenzie found.
Two years after the Brexit vote and nine months before the UK leaves the EU, over 75% of the respondents said their business would be the same or better off it the UK were to remain in the EU. In Ireland, that percentage jumped to 97%.
The report, surveying 800 EU27 business leaders from six major European markets, also found that companies in Spain are the most prepared for difficult trade relationships with the UK post-Brexit.
While some 67% of Spanish companies are planning for the potential loss of preferential trade terms, just 55% are doing so on average in the UK. Conversely, 45% of the respondents have not made any preparation arguing the difficulty of preparing for something that has yet to be defined.
Madrid-based partner Cecilia Pastor says: “This is about more than Brexit. Spanish companies are among the most agile and prepared when it comes to handling disruptive change – one of the consequences of the 2008 recession was the overhaul of business models to diversify, digitize and find new markets.”
Baker McKenzie International, Commercial & Trade partner Ross Denton said: “While Brexit may be prompted by the UK, it will impact businesses in both the UK and the EU dramatically. To ensure Brexit is the success it potentially can be EU businesses need to engage now if they feel unheard or under-prepared, either through their national or European trade associations, or directly with the EU and national governments.”
Regarding to politics, three quarters of respondents believe that the EU should make concessions to the UK to secure a better trading relationship for EU27 businesses, with support for concessions in Spain and the Netherlands significantly higher still.
The survey confirmed that a Free Trade Agreement with the UK is more popular within the EU27 business community than a Customs Union, with 67% of respondents deeming a FTA as being important to their business, versus 45% for the Customs Union.
In response to the UK decision on leaving the union, over a third of respondents would like to see the UK punished under the terms of any future trade deal, with 41% of French and 45% of German respondents supporting some degree of punishment. However, 96% of respondents considered that preferential trade with the UK was more important than “punishing” the UK.
With regards to a positive impact of Brexit on businesses, 45% of respondents said that Brexit represents an opportunity for their company to attract future business away from the UK, with optimism highest in Sweden and France where more than half of respondents see Brexit as an opportunity. In Ireland just 30% believe there could be an upside for their business.