CIPS News


Businesses warn of high prices this Christmas as Covid-19 and Brexit disruption hits supply chains

CIPS 21 October 2020

A survey of 557 UK supply chain managers by the Chartered Institute of Procurement & Supply (CIPS) found that nearly a quarter (22%) are paying more for goods this Christmas 

  • Nearly a quarter of UK supply chain managers are paying more for goods and are planning to transfer these costs to consumers this Christmas
  • Nearly half say their business is less prepared for Brexit compared to last year because of the additional impact of the pandemic
  • 45% of UK businesses with EU suppliers think their goods will now be delayed by a week or more at the border due if there is no deal

Shoppers look likely to face higher prices this Christmas as a combination of Covid-19 and Brexit uncertainty looks set to disrupt the UK’s supply chains in the run up to the festive season.  

A survey of 557 UK supply chain managers by the Chartered Institute of Procurement & Supply (CIPS) found that nearly a quarter (22%) are paying more for goods this Christmas and are planning to transfer these costs to consumers. Meanwhile, 16% of UK businesses expect stock to run low this winter as a direct result of Covid-19.

The Christmas disruption is a result of the widespread remapping of supply chains in the wake of Covid-19 lockdowns, with 30% of UK businesses with an international supply chain stating they have moved at least one supplier back to the UK as a result of the pandemic. Over a third (39%) of UK businesses also stated that they have lost at least one of their suppliers through bankruptcy or failing to reopen after lockdown.

Dr John Glen, CIPS Economist, said:

“Consumers may well see higher prices this Christmas, and it’s no surprise. The UK’s supply chains have undergone a remarkable shake up as a result of Brexit and the pandemic. Businesses have battled staff shortages, had to replace critical suppliers at short notice and find safer, socially distanced ways to manufacture goods, and some of these costs will make their way to consumers.”

Brexit delays

The impact of stock shortages is more far reaching than just affecting Christmas supplies, however. Despite 44% of UK supply chain managers saying they plan to hold extra stock ahead of the January 1st Brexit deadline, one in five (20%) of UK businesses who work with suppliers in the EU admit to having used up their Brexit stockpiles in response to Covid-19, and so heightening the impact of any further delays at the border. Indeed, compared to last year nearly half (46%) of UK supply chain managers say that their business is less prepared for Brexit as a result of the pandemic.

Almost a third (29%) of UK supply chain managers also believe the financial impact of lockdown has made their supply chain more vulnerable to Brexit disruption and 17% say the knock-on impact of the pandemic means they do not have the people or resources to adequately prepare for Brexit this time around.

Dr Glen added:

“The transition period was designed to provide businesses with more time to prepare for Brexit, but the Covid-19 pandemic has undone much of that hard work.  

“After months of coronavirus disruption, businesses have neither the cash nor the manpower to prepare for a no-deal Brexit. Deal or no deal, time is running out.”

Whether or not a deal is eventually agreed with the EU, UK supply chain managers are expecting delays at the border after January 1st which could lead to even more shortages in the new year. 45% of UK businesses with EU suppliers believe their goods will now be delayed by a week or more at the border if there is a no-deal outcome, but this falls to 19% if a deal is agreed.

However, Brexit delays are not the only threat on the horizon. Half (50%) of UK supply chain managers with EU suppliers believe further lockdown restrictions are a greater threat to their supply chains than a no-deal Brexit.

About the Chartered Institute of Procurement & Supply:

The Chartered Institute of Procurement & Supply (CIPS) is the world’s largest professional body in this field and is the dynamic champion driving the procurement and supply management profession.  It is the worldwide centre of excellence on procurement and supply management issues. CIPS has a global membership of over 70,000 in 150 different countries, including senior business people, high-ranking civil servants and leading academics.

The activities of procurement and supply chain professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions packages to improve business profitability. www.cips.org; @CIPSnews

About the survey

These findings were drawn from a survey of 557 UK supply chain managers. The survey ran from Wednesday 23rd September to Monday 5th October 2020.

Results of the other surveys are available on the CIPS Brexit page

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