"Millions of pounds" spent so far on Brexit preparations © Getty Images
"Millions of pounds" spent so far on Brexit preparations © Getty Images

Half of firms' Brexit supply chain plans damaged by Covid

1 December 2020

Almost half (46%) of UK manufacturers say their Brexit supply chain plans have been damaged by the coronavirus pandemic.

A survey of 500 manufacturers also found 25% had not made “appropriate arrangements” for the end of the transition period on 31 December because of the outbreak. Just 6% of firms with international supply chains said they had seen no impact on Brexit plans.

The findings come as the UK government announced a new Border Operations Centre that will use technology to monitor the border in real-time to achieve “a complete view” for the first time on the movement of goods and passengers. 

The government said “rapid decision-making” enabled by the centre would minimise expected disruption.

The survey, by insurance broker Lockton, found SMEs were most exposed to post-Brexit supply chain risks as 30% had not put provisions in place. Two in 10 large firms (19%) were unprepared.

More than a third (35%) of respondents had failed to implement plans for delays, risks to administration costs and processes, and the renegotiation of long-term contracts. Around four in 10 (39%) hadn’t managed foreign exchange risks, and 36% were unprepared for increased product orders. Around a quarter (24%) had set up alternative supply chains.

Preparations for Brexit had cost manufacturers significantly, with spend “reaching into the millions of pounds for the larger UK companies”. 

The most common actions to reduce supply chain risk had been localisation, diversification of suppliers and product offerings to cut international vendors, reallocating finance for extra costs, and using data tools to ease customs and tax complications.

Debbie Day, managing partner at Lockton, said: “It’s essential for businesses to undertake full supply chain risk assessment, so that they can fully understand their exposure and the cost implications.”

Michael Gove, Cabinet Office minister, said: “At the end of year we will take back control of our borders and that’s why we have set up the new Border Operations Centre to monitor and analyse flows of goods and people into the UK in real time.”

Business secretary Alok Sharma said letters had been sent out to almost 5m UK businesses “outlining the top actions they need to take in preparation, and reminding them that the government is here to support them as the transition period ends”.

Gove has previously said some disruption will be inevitable.

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