Leaving the EU without a trade deal is the nightmare scenario business leaders have been fearing for years but even if there is a last-minute breakthrough, companies are expecting delays and chaos.
Tariff codes have not yet been published so companies cannot complete customs paperwork or factor in how much more expensive it will be to import and export goods.
Loss of access to the customs union will damage industries, which have been struggling all year to cope with preparing for the unknown, as well as the coronavirus crisis.
Companies might “sit on their hands” for January and decide not to export goods until the picture becomes clearer.
One executive told the PA news agency that business leaders were physically and mentally exhausted with having to stay afloat through the pandemic and were unlikely to spend the next few weeks looking through any Brexit documents.
Paul Everitt, chief executive of aviation trade group ADS, told PA: “No-deal is the worst possible outcome for UK industry, causing major disruption and even greater additional costs of doing business through delays, extra administration and complex regulatory challenges.
“With the end of the transition period fast approaching, negotiators on both sides must work to find pragmatic solutions to any remaining differences.
“The UK’s aerospace manufacturers are facing an unprecedented crisis as a result of the pandemic, putting many in a daily struggle to survive and placing tens of thousands of jobs at risk across the country.
“Failure to agree a deal risks exacerbating this crisis, endangering livelihoods and the UK’s future industrial capability.”
Darren Jones, chairman of the Business, Energy and Industrial Strategy Committee, said recent evidence to MPs highlighted “significant challenges” which businesses were facing.
“While Britain’s businesses are hoping that a Brexit deal will be reached, companies across many sectors will face disruption from January 1,” he said.
Business leaders have warned the committee that even in the event of a Brexit deal, there was a threat of potential food shortages and price rises and significant costs on the car industry.
The Institute of Directors (IoD) called on the Government to pull out all the stops to land a deal, as a survey showed one in four directors believed they would be ready for Brexit by the end of the month.
Director general Jonathan Geldart said: “Brexit is a moving target for directors. Trying to prepare, while dealing with the impacts of the pandemic, is a tall order.
“No-deal would hamper the recovery business leaders want to fuel in the new year.
“As negotiations on fundamental detail continue with mere weeks left, it should come as no surprise that the majority of directors affected by Brexit aren’t ready.”
Manufacturing organisations Make UK, Scottish Engineering and Manufacturing Northern Ireland, said in a joint statement: “After over four years of uncertainty, UK manufacturers are now facing the most challenging start to the new year, dealing with a pandemic and the risk of having no trading arrangement with our largest market.
“A no-deal would be catastrophic for Britain’s manufacturers, a sector which came to the nation’s aid when the Covid crisis struck.”