A third of businesses (32%) have raised prices to consumers because of the UK’s departure from the EU, according to the latest CIPS Brexit Survey.
The third Brexit survey shows two-fifths (41%) of respondents plan to increase their prices in the future to offset the potential costs of Brexit, while almost a quarter (23%) said they planned to reduce the size of their workforce.
Additionally more than one in 10 (11%) EU firms have moved some of their workforce out of the UK and 9% of UK firms have lost contracts, or had them cancelled, as a direct result of Brexit.
The survey, involving 2,204 supply chain managers, found 22% of UK businesses with EU suppliers are having difficulty securing contracts that run after March 2019, while 14% of EU firms with UK suppliers have already moved parts of their business out of the UK to reduce exposure to Brexit risk.
The poll found 42% of EU supply chain managers did not think British products “stand out from the crowd” and 37% said it would be less expensive to work with a local supplier compared to a UK one.
On a more positive note, just 8% of supply chain managers outside the EU felt UK products did not stand out, implying British firms could benefit by targeting markets outside the EU.
To mitigate these challenges, a third (36%) of British supply chain managers with EU suppliers said they were looking for alternative suppliers in the UK.
John Glen, CIPS economist, said: “Businesses have little choice but to pass on some of their rising costs to consumers in order to protect their profit margins and stay in business, as a result of the crippling cost of Brexit. However, businesses are still taking the brunt of the impact as there is a limit to what they can pass on to consumers at a time of stagnant wage growth, and rising inflation.
“Businesses are now looking elsewhere to try and recuperate the money they are losing as a result of Brexit. To achieve this, many are also looking to switch suppliers, but they’re likely to have difficulty finding suitable alternatives in the UK.
“It is therefore crucial they don’t burn their bridges with their EU contacts but instead work to build stronger relationships with European partners. Businesses should also consider other ways through which they can improve the efficiency of their supply chain, such as by embracing new technologies and automating processes.
“In the end, businesses that fail to plan ahead and use this opportunity to reduce costs in their supply chain may not survive post-Brexit.”
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