Nearly a third of U.K. firms may shift operations abroad because of Britain’s pending departure from the European Union, a survey of 1,200 company directors suggested Friday, as political stalemate over a Brexit deal heightened jitters among businesses.

 

The survey by employers’ group the Institute of Directors found that 16 percent of businesses already had relocation plans while a further 13 percent were “actively considering” a move.

 

The group said that while headlines have focused on big companies, less notice has been given to smaller businesses and their moves to relocate.

 

Institute interim director Edwin Morgan said smaller firms typically have tighter resources and for them “to be thinking about such a costly course of action makes clear the precarious position they are in.”

 

Britain is due to leave the EU on March 29, but a divorce agreement struck between Prime Minister Theresa May’s government and the bloc late last year as been rejected by Britain’s Parliament.

 

U.K. lawmakers voted this week to send May back to Brussels to seek changes to the divorce agreement. But the EU is adamant that the deal cannot be renegotiated, leaving Britain lurching toward a cliff-edge departure from the bloc on that many businesses fear will cause economic chaos.

 

A survey of companies released Friday showed that manufacturing firms stockpiled goods at a record rate in January to prepare for potential Brexit disruption to trade.

 

The survey of about 600 manufacturers by market research company Markit and the Chartered Institute of Procurement and Supply found that inventories of finished goods rose sharply, while optimism in the sector was at a 30-month low and jobs were starting to be cut.

 

Senior government ministers have suggested Britain may have to seek a delay to Brexit to make time to find a solution.

 

A delay would need the approval of the 27 remaining EU states. Ireland’s Europe Minister, Helen McEntee, said the bloc would likely agree, as long as Britain had a good reason.

 

“There is no point in looking for an extension if we end up back to the same place in three months’ time,” she said. “We need to have a clear direction from the U.K. government as to what it is we want to achieve.”

 

The sticking point to a deal for many British lawmakers is a border measure known as the “backstop,” a safeguard mechanism that would keep the U.K. in a customs union with the EU to remove the need for checks along the border between the U.K.’s Northern Ireland and EU member Ireland after Brexit.

 

The border area was a flashpoint during decades of conflict in Northern Ireland that cost 3,700 lives. The free flow of people and goods across the near-invisible border underpins both the local economy and Northern Ireland’s peace process.

 

Many pro-Brexit British lawmakers fear the backstop will trap Britain in regulatory lockstep with the EU, and say they won’t vote for May’s deal unless it is removed.

 

May has been sounding EU leaders out on potential changes, but Britain’s stance has caused exasperation among politicians in the bloc, who point out that May signed up to the deal that she is now seeking to change.

 

“This was a deal that was negotiated with the U.K., by the U.K.,” McEntee said. “They weren’t bystanders in a separate room. There were discussions, negotiations, there were compromises on both sides.”

 
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