Fourteen percent of UK businesses believe it will be difficult to break even this Christmas as a result of currency instability and Brexit uncertainty, according to a survey of supply chain managers by the Chartered Institute of Procurement & Supply (CIPS).
The survey of 817 UK and EU supply chain managers found that UK businesses have taken steps to protect their supply chains, with one-fifth (21%) importing their Christmas stock earlier to avoid border disruption. However, there is evidence that the risk of a no-deal is making this difficult with 9% of businesses struggling to find affordable warehouse space to store Christmas stock and the same proportion concluding that they may not be ready for Christmas at all this year as a result of Brexit.
While almost half (48%) of UK businesses have not had their Christmas preparations affected at all by Brexit, more than a fifth (21%) say that moving the deadline from March to October has made their Christmas 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 also found that thousands of UK companies are set to be turned away from the UK/EU border due to a lack of paperwork in the event of a no-deal Brexit. Just 22% of UK companies with EU suppliers have completed all four steps necessary to export to the EU in the case of a no-deal Brexit.* Worryingly this is only slightly higher than in March 2019, when 14% of companies had completed all the necessary steps to export.
Businesses could also be launched into contract negotiations with their European counterparts on the 1st of November following a no-deal. Almost two fifths (38%) of UK businesses with EU suppliers have already had ‘Brexit clauses’ added to their contracts which allow prices or other terms to be re-negotiated in the case of trade tariffs increasing.
Dr John Glen, added: “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.”
*The survey asked respondents if they could: apply for an EORI number; ensure they can complete each data field in the declaration; agree responsibilities with their customs agent and logistics provider and identify software for submitting documents if they do not use a customs agent.
About the survey
These findings were drawn from a survey of 817 supply chain managers from the UK and EU. The survey ran from 19th August to 2nd September 2019. There were 714 UK respondents and 103 EU respondents involved in the survey.
Part of the survey asked respondents about the impact of Brexit uncertainty on their Christmas preparations. The respondents to this question were based in the UK and from the private sector. Some of these respondents have EU and international suppliers. Respondents who are not affected by seasonal demand were not included.