Brexit uncertainty 'to hit Christmas profits'

Will Green is news editor of Supply Management
18 September 2019

One in seven (14%) UK businesses believe it will be difficult to break even this Christmas due to currency instability and Brexit uncertainty, according to a CIPS survey.

The survey, involving 817 UK and EU supply chain managers, found one fifth (21%) of UK firms had imported Christmas stock earlier to avoid border disruption, predicted in the event of a no-deal exit on 31 October.

However, 9% had struggled to find affordable warehouse space to store Christmas stock and the same proportion said they may not be ready for the festive period at all as a result of Brexit.

Almost half (48%) of firms said Christmas plans had not been affected at all by Brexit but a fifth (21%) said moving the deadline from March to October had made their preparations more difficult.

Dr John Glen, CIPS economist and visiting fellow at the Cranfield School of Management, said: “Festive cheer appears to be in low supply for UK businesses, with many concerned about the impact Brexit will have on their ability to survive the busy Christmas period.

“With only weeks to go until the Brexit deadline and still minimal clarity on the situation at the border, supply chain managers are doing all they can to ensure products and goods make it into the country in time for Christmas.

“The October Brexit deadline falls during a crucial period for many UK businesses, when they would normally be busy importing stock for the Christmas period.

“Mass border disruption during this time could have a catastrophic impact, and so businesses need to be provided with as much detail and support as possible to ensure they can survive the festive period and protect UK businesses and UK consumers from an economic and miserable disaster this Christmas.”

The survey found just 22% of UK companies with EU suppliers had completed the customs steps necessary to export to the EU in the case of a no-deal Brexit. Almost two fifths of such firms had added “Brexit clauses” to contracts to allow prices and other terms to be re-negotiated if trade tariffs increased.

Glen said: “The government has promised to automatically distribute EORI numbers, but with the Brexit deadline just weeks away, the government faces an uphill battle to get businesses ready in time.

“UK businesses need to be braced for impact and ready to adapt in a post-Brexit world. New trade tariffs could cause contracts to be re-negotiated and new routes found, so supply chains will need to be flexible in order to survive and flourish.”

Glen will share his latest insights into the impact of Brexit on 31 October at the CIPS UK Conference.

☛ SM is conducting a survey on Brexit to discover how businesses have been affected. Take part here.

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