• One in four (24 per cent) UK firms consider competition to be biggest business risk
• Among challenges posed by Brexit, weaker demand is seen as greatest overall
• Yet 38 per cent of businesses have no contingency plan in place for ‘no-deal’ Brexit scenario, despite uncertainty

Competition is the single biggest challenge currently facing UK businesses overall, according to research released today by Lloyds Bank Commercial Banking.

Polling undertaken as part of the Bank’s Business Barometer report revealed that, against a backdrop of ongoing Brexit negotiations, firms see competition as the greatest risk in general facing their business (24 per cent), followed by demand outlook (20 per cent), regulation (18 per cent) and the labour market (14 per cent).

The threat posed by competition is viewed as particularly acute by the retail and wholesale sectors, where 42 per cent and 39 per cent of businesses respectively saw it as their biggest challenge.

Meanwhile, the labour market was seen as the biggest challenge for both the hospitality and manufacturing sectors (27 per cent and 21 per cent respectively).

Challenges posed by Brexit

When asked to cite the specific challenges posed by withdrawal from the EU, businesses said weaker demand was their biggest concern (16 per cent), followed by the cost and availability of labour and foreign exchange volatility (both 15 per cent). 

Despite their concerns about the risks posed by Brexit, a net balance of just 25 per cent of businesses are planning to take active steps early on to avert the risk posed by a ‘no deal’ scenario.

Almost four in ten (38 per cent) businesses have no contingency plans in place to counter the possibility of Brexit negotiations falling through, compared with 20 per cent that have taken some steps already and 25 per cent that plan to do so in the next 12 months.

The construction sector is the least prepared for Brexit, with almost half (45 per cent) admitting no strategies are in place. Some 18 per cent have already made Brexit preparations, with a further 20 per cent planning to take action to avert potential risks over the next year.

Lars Olesen, MD, Mid Markets & SME, CB Markets at Lloyds Bank Commercial Banking, said: “Against a backdrop of uncertainty, businesses’ biggest overall concern is competition.

When asked specifically about the UK’s withdrawal from the EU, businesses acknowledge that Brexit adds another layer of complexity to firms’ risk management strategies.

“As businesses await further clarity about the terms of Brexit, the perceived potential risks to domestic and global positions are growing in response. What is clear is that inaction will be costly and firms need to have robust preparation plans in place.”