AROUND seven out of 10 finance chiefs are braced for a hard Brexit but less than half reckon their organisations are prepared to deal with the implications of one, a survey has found.

In the latest Brexit Tracker research by the Institute of Chartered Accountants of Scotland, 65 per cent of respondents thought it very or quite likely that the UK will leave the European Union without an agreement in place.

However, only 45% believed their organisations were either very or quite prepared for the implications of such a scenario.

The poll underlines the challenges business face in trying to prepare for Brexit amid huge uncertainty about how events will unfold between now and the planned exit date on March 29.

The exercise was completed last month in the week a draft withdrawal deal was published and agreed by the EU and the UK Cabinet, resulting in some ministers quitting in protest.

Theresa May suffered three defeats in the House of Commons regarding Brexit this week which have left her facing the prospect of MPs rejecting the deal in a crucial vote on Tuesday.

“Businesses are trying to plan for the future against a difficult political backdrop with no clear consensus. There’s no doubt that the clarity they need to prepare for Brexit is in short supply,” said ICAs chief executive Bruce Cartwright.

He added: “We have to hope that the current parliamentary debate will tackle some thorny issues and start to deliver much needed clarity.”

Around six out of ten respondents, 61%, told ICAS they wanted the UK to remain in the single market, compared with 62% in the Brexit Tracker published in September. The percentage expecting the UK to end up in the EU customs union without being in the single market has increased to 29% from 17%.

Mr Cartwright noted: “It’s concerning that only 45% of respondents believe their organisation is prepared for a no-deal Brexit.”

Christine O’Neill, chairman of survey sponsor Brodies law firm, urged businesses to take the prospect seriously.

“There is no call for Brexit-related hysteria, but I would recommend that no-deal planning moves up on everyone’s agenda,” she said.

The survey findings suggest there is a gulf between big businesses and small and medium sized enterprises in terms of readiness, with 51% of large organisations “prepared” compared with just 33% of SMEs.

ICAS said around half of large organisations have carried out scenario planning for the implications of Brexit on human relations, regulatory issues and the organisation’s business plan.

Some 45% have considered supply chain and logistics with 31% assessing location issues.

Among SMEs, with fewer than 250 employees, 32% have looked at business plan scenarios while 17% have considered hiring and human relations issues.

Businesses do not appear to have made much use of the notices issued by the UK Government on the implications of a “no-deal” Brexit.

While half the respondents had heard of the notices only 8% had read one or more. Of those that had read at least one, 58% found a paper useful, against 42% who didn’t.

Respondents appeared to have become slightly less pessimistic about the likely impact of Brexit on their organisation with the relevant index reading moving from -16 in September to -13, where -50 means very pessimistic.

They are gloomier regarding the impact on the UK economy, with the reading moving to -22, from -21 last time. Eighty six per cent of respondents expect to see interest rates increase over the next two years and 65% think sterling will fall. Three quarters reckon inflation will rise.

The survey got responses from more than 400 members of ICAS across the UK.