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Expect No Deal and pray for an Extension to Article 50: advice to clients

Andrew Gray - PwC head of Brexit
Mats Persson - EY Brexit lead
James Stewart - head of Brexit, KPMG

Expect No Deal. Hope for something better. Act now. Pray for a delay.

That's a fair summary of the advice senior professional services firms are offering their increasingly despairing clients after another political pantomime occasion in Westminster yesterday.

Commenting on the results of last night's votes on Brexit in the House of Commons, Andrew Gray, head of Brexit at PwC, said:

"The results of last night's votes show that for businesses, certainty on Brexit is still some way off. It's important for businesses to remember that until a way through can be found, 'no deal' remains the default legal outcome.

"With a quickly changing political landscape, it can be tempting for businesses to wait until the next political milestone before executing their implementation plans in the hope of having more clarity on the eventual outcome.

"But with under two months to go before our departure from the EU, businesses can't afford to wait: by the time we have legal certainty, it will be too late to mitigate the impact of a no-deal Brexit.

"Our advice to businesses is don't wait any longer. For those who haven't started implementing no deal actions, there are still steps they can take to minimise disruption. But the longer they leave it, the more difficult this will be. Organisations need to urgently activate their no deal plans, while still preparing for both a deal and no deal outcome. The time to act is now."

Impossible for businesses

Mats Persson, EY's Brexit Strategy lead, said, "Half of the businesses we recently surveyed said the meaningful vote and this follow-up vote would be the point of certainty they were waiting for to either accelerate or stand down No Deal planning, including decisions on whether to stockbuild, re-route supply chains or transfer regulatory licences."

"In reality it's near impossible for businesses to draw any firms conclusions from these votes. Many businesses have now simply concluded that the politics are too confusing to plan around and have resigned themselves to ignore political milestones and basically continue to plan for a No Deal until the very end — whatever that endgame might look like."

"With the clock ticking ever closer to 29 March deadline, it is clearly a risky strategy by the Government to double-down on renegotiating the Irish backstop and re-open the Withdrawal agreement when the EU has sought to rule that out. But on the upside, these votes have given Theresa May a renewed mandate to go the EU, have shown it's possible for Remainers and Brexiteer MPs to work together and has opened up a route to cross-party talks."

Praying for an extension

Commenting before the Amendment debate, James Stewart, Head of Brexit at KPMG UK said, "Many of the businesses we're speaking to are praying for an extension to Article 50. Nearly all larger firms are now preparing for Brexit, after some came late to the party — however the timing of no-deal implementation planning remains highly variable.

"The chances of some sort of extension or grace period may have increased but prudent firms will keep preparing for no-deal so long as it remains an option. At this stage even our most informed clients feel as if anything could happen. They're thinking about getting products from A to B, market access, and staffing up situation rooms for April. Forecasting the outcome of Brexit is a bit like trying to predict a greyhound race, there are no safe bets."

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