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UPDATE 1-Companies prepare for disorderly Brexit as talks stall

UPDATE 1-Companies prepare for disorderly Brexit as talks stall
From Reuters - December 7, 2017

LONDON (Reuters) - Big companies are stepping up their plans in case Britain crashes out of the European Union without a deal as Prime Minister Theresa May struggles to get talks back on track after a major setback.

Britain is aiming to agree with the EU on Dec. 14 to move the Brexit talks on to the second phase. This would focus on trade and a two-year transition deal to smooth the departure after March 2019. But the timetable has been thrown into doubt after discussions broke down in Brussels on Monday.

Senior executives in the financial services sector, which accounts for about 12 percent of the economy, told Reuters Mays efforts to secure a transition deal had come too late and they had no choice but to start restructuring.

Big supermarkets such as Tesco and Sainsburys have been working with suppliers to identify potential delays, shortages or price rises. They have lined up alternative providers, according to suppliers and sources in the industry.

The uncertainty is particularly painful for themanufacturing sector as low margins make it risky for them to restructure unless it is essential. They have been holding off on investment but are preparing for new certification that would allow them to sell in Europe if there is no deal.

The delay is so great and the uncertainty is so great that companies have no choice but to start triggering their plans, the head of one of Britains largest companies said.

Paul Drechsler, the president of the blue-chip business lobby group the CBI, said businesses were now having to plan for the worst while hoping for the best.

No company wants to move jobs or shift productionbut business will if it has to, he said. Theres no time to waste. In the immediate term, business needs to know the details of any transition dealRome is burning on that issue.

Britain and the EU are working to get talks back on track this week but the chairman of one large international bank said its executives had decided to plan for the worst at a conference call on Tuesday.

The question is no longer whether we are moving (operations to the EU), it is a question of how big those moves are?, he said.

Like other executives, he had been asked by his board and the government not to divulge their thinking.

FRUIT AND BEEF

The chairman said the bank has started discussions with customers about rerouting client activity to European hubs, including rewriting thousands of contracts.

Senior employees were told last month if they had to relocate to Europe, he said.

Another senior executive at a large U.S. bank said that he was increasingly concerned that Mays government could collapse after the Brussels talks broke down over a dispute about the Irish border, adding to the uncertainty.

We are at the maximum point of danger, he said.

MANUFACTURING PRESSURE

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