Brexit: businesses should draw up contingency plans

27 June 2016

Britain’s decision to leave the European Union has heralded warnings of the potential impact on the supply of labour, shipping costs and supply chains.

Businesses have been warned to draw up contingencies to address risks around rising costs, sourcing constraints and trade barriers.

Laila Beswick, marketing manager at GT Nexus, said: “What is certain is any new trade barriers will affect global supply chain structures and operations. Simple transactions that would otherwise be carried out straightforwardly may get more complex and cause uncertainty, for example the release and payment of goods.

“Organisations may incur excess costs, shipment delays and more custom/border patrolling.

“A first step is to make an assessment of inventory whereabouts, sourcing constraints and trading partners effected by Brexit.”

Meanwhile, Labour provided by EU countries could now fall and severely impact businesses’ day-to-day operations.

Phil Bulman, managing consultant at Vendigital, said: “Many businesses may not realise how reliant their supply chains have become on EU workers in recent years.

 “Businesses that think they might be exposed to a risk of skills shortages or supply chain disruption should labour supply be cut off in the future need to prepare contingency plans now.”

The Freight and Transport Association (FTA) called for upcoming Brexit negotiations to prioritise the movement of freight and the minimisation of legislation and costs.

FTA chief executive David Wells said: “Even though we are coming out of Europe politically, it remains our biggest export market and the supplier of a high proportion of our imports.

“We cannot allow new bureaucratic burdens to hamper the efficient movement of exports heading for customers and imported goods destined for British consumers."

These restrictions could also impact trade across the UK’s border with the Republic of Ireland. The UK is the republic’s largest mutual trading partner and the FTA insisted this relationship must be maintained through the Brexit negotiation.

A Brexit crisis summit hosted by business secretary Sajid Javid takes place in London tomorrow, where the Federation of Small Businesses will seek assurances that firms will be able to maintain access to the single market, which represents 500m potential customers and more than 26m businesses.

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