The cost of tariffs and non-tariff barriers on firms if the UK and EU revert to WTO rules post-Brexit has been calculated at £58bn, say the procurement institute CIPS.
In a study, consultants Oliver Wyman and law firm Clifford Chance said EU exporters would be hit to the tune of £31bn, while for UK exporters the figure would be £27bn.
In the UK the hardest hit sector will be financial services, which will incur around a third of the extra red tape costs. The report said 70% of the extra costs would be borne by financial services, automotive, agriculture, food and drink, consumer goods and chemicals and plastics. For the EU the automotive sector will be the most affected.
The report said: “In the absence of clarity over the future trading relationship between the UK and the EU27, the most proactive firms are recognising the uncertain path ahead and have developed contingency plans that will be enacted in phases if uncertainty persists, and in some cases are already being deployed.
“However, the readiness of companies varies considerably and many have still made no contingency plans for adapting to Brexit. Robust plans will be required not only to manage the costs arising from Brexit but also to take advantage of the opportunities, such as the creation of new supply chains and the localisation of operations.”
The report said remaining in a customs union would reduce the UK impact to £17bn and the EU’s to £14bn.
Kumar Iyer, a partner at Oliver Wyman, said: “There will be both winners and losers from Brexit. In order to navigate the uncertainty companies should be thinking about impacts under different scenarios both operationally and strategically. We see the best-prepared firms taking hedges now based on the direct impacts on themselves, their supply chains, customers and competitors. Unfortunately, we see that small firms are least able to take these steps at present.”