Why are suppliers 'cautious' about selling to the UK?

7 March 2023

Half (48%) of UK manufacturers say EU suppliers are “cautious” about doing busines with UK customers, according to a survey.

The survey of UK manufacturers by trade body MakeUK found EU suppliers were concerned about a “difficult political relationship” between the UK and EU following Brexit.

More than a third (35%) of respondents also said suppliers from the rest of the world were wary of supplying to the UK.

MakeUK said this could be for a range of reasons, including a difficult political relationship between the EU and UK, the trading landscape becoming more practically difficult following Brexit, the prospect of regulatory divergence, and the broader, global challenge for competitiveness. 

Four in 10 (40%) of manufacturers increased their use of UK suppliers over the past year and 20% had reduced the number of suppliers from the EU, the survey found.

However, MakeUK urged firms to develop a good relationship with EU markets, saying it was “vital to the success of manufacturers in the UK”.

On average, one fifth of manufacturers’ suppliers are based in the EU, and adding non-EU countries increased this proportion to a quarter.

To improve relationships with the EU manufacturers should engage with existing frameworks and agreements, such as the Trade and Cooperation Agreement, to discuss potential barriers to trade, said the report.

It emphasised the need for the UK to approach the EU for negotiations and return to internal stakeholders with options, rather than setting strict boundaries on what it would agree to.

However it also emphasised the need for the EU to be more willing to compromise – the recent agreement reached for Northern Ireland signified a positive step for trade between the EU and UK.

The change in the UK’s relationships with trading partners was being exacerbated by the general volatility affecting global supply chains, the report added.

Manufacturers were both increasing the diversity of their supplier base, spreading out to more regions, and consolidating their suppliers, to reduce complexity and mitigate disruption.

Verity Davidge, director of policy at Make UK, said: “Supply chain disruption has created unprecedented times for businesses across the globe in recent years, a pattern of volatility which is fast approaching a permanent state.

“However, resilience in supply chains is growing and driving new behaviours as companies diversify and increasingly seek new ways of doing business and managing their processes.”

 Want to stay up to date with the news? Sign up to our daily bulletin.

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates