EU firms plan to drop UK suppliers

Despite recent progress a survey of 1,118 supply chain managers by the Chartered Institute of Procurement & Supply (CIPS) has uncovered some startling Brexit decisions by UK and European businesses.

63% of EU businesses expect to move their supply chain out of the UK, while 40% of UK businesses are looking to replace their EU suppliers and 25% of large UK businesses have already spent in excess of £100,000 preparing their supply chains for Brexit

The survey results show a sharp increase is EU businesses planning to move out of the UK (up from 40%) and illustrate how far confidence has fallen that a frictionless trade deal will be agreed by the UK/EU negotiating teams.

The shift comes as the Brexit negotiations appear to be deadlocked with half of UK businesses saying they are becoming less confident that the UK and EU will secure a deal which continues to offer ‘free and frictionless trade’, while 35% of UK businesses feel unable to prepare due to the lack of progress on a future trade relationship.

The survey also highlighted issues that are impacting businesses already, including extra costs because of currency fluctuations, struggling to secure contracts that extend past April 2019 and 15% of UK businesses have postponed or cancelled contracts because of the uncertainty over Brexit.

However, it also found that a quarter of UK businesses are investing more time to strengthen their relationships with valuable suppliers on the continent.

CIPS chief executive Gerry Walsh

CIPS chief executive Gerry Walsh

Supply chain managers are clear where the Government should focus as the next phase of the negotiations begin with 73% saying keeping tariffs and quotas between the UK and Europe to a minimum should be the main priority for the negotiations.

CIPS chief executive Gerry Walsh said: “The Brexit negotiating teams promise that progress will be made soon, but it is already too late for scores of businesses who look like they will be deserted by their European partners. British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together.

“While the TV cameras are fixed on Brussels, the deals which will determine the future prosperity of Britain and Europe are being struck behind closed doors in businesses large and small. The lack of clarity coming from both sides is already shaping the British economy of the future – and it does not fill businesses with confidence.

“The success of the negotiations should not be measured on the final deal only but on how quickly both sides can provide certainty. The clock is ticking.”