Brexit fears add millions on to costs for business

A third of bosses at Britain’s biggest public companies say they have spent up to £1 million preparing for the consequences of leaving the EU.

A survey of senior board members at FTSE 350 companies has found that almost 7 per cent intend to relocate parts of their UK operation should the nation vote to leave on June 23. While the vast majority said they would stay put regardless of the result, 17 per cent said they would consider moving if there were a vote for Brexit.

More than three quarters said they thought a vote to remain would be best for their business. Only 7 per cent believed they would be better served by a win for the Leave campaign.

Research by Reputation Leaders for The Times and Odgers Berndtson, the recruitment company, suggests that most businesses have yet to invest in contingency plans. Of 304 executives and directors who took part, 33 per cent said they had spent up to £1 million preparing for the fallout of a Leave victory. Two per cent said they had spent between £1 million and £5 million.

Respondents were particularly pessimistic about the uncertainty they believed would be triggered by a Brexit vote, with 67 per cent saying they would expect it to last for at least two years.

They also took a bleak view of the economic impact, forecasting that it would hit investment, jobs and the exchange rate. Eighty-one per cent of the directors interviewed between April 29 and May 17 suggested that Brexit would harm investment in the UK, while 76 per cent predicted bad consequences for employment and 86 per cent believed that it would have a negative impact on the exchange rate.

Two thirds warned that leaving the EU could reduce exports — but 16 per cent suggested that it would increase them. Sixty-eight per cent said that leaving would have a negative effect on revenue streams.

Although the majority of executives and directors favour remaining in the EU, only 16 per cent said that their board had taken an official position.

Kit Bingham, a partner at Odgers Berndtson, suggested that many leaders were not publicly coming down on either side of the fence because they feared a backlash.

“The survey results are overwhelmingly clear — the directors of Britain’s biggest businesses want the UK to remain inside the European Union,” he said. “But Britain’s boards are mostly hesitant to publicise an official position, recognising that a significant proportion of their staff, customers or other stakeholders may hold contrary views.”

Big companies including Marks & Spencer, the John Lewis Partnership and Kingfisher, which owns B&Q, attracted anger from Scottish independence campaigners when their leaders intervened before the referendum in September 2014, warning that prices could rise if Scotland voted to go it alone. Days later, 44 per cent of voters backed independence.

Many survey respondents warned of the consequences of a Leave vote in next month’s referendum. “Having worked for multinationals a lot in my career, I would say they will have no qualms relocating most of their European businesses,” one warned.

Another argued that Brussels needed “massive reform” and called for a “very close result” to wake up EU leaders.

The standard of debate during the campaign was singled out for criticism. “Very poor discussion and understanding of the consequences makes planning hard,” one director concluded.