Saturday 27th May 2017 - Logistics & Supply Chain

Brexit: companies set to sever European ties

Many businesses are preparing to sever supply chain ties between the UK and the EU to avoid Brexit tariffs, according to survey of 2,111 supply chain managers by the Chartered Institute of Procurement and Supply.

Almost one third of UK businesses that use EU suppliers are looking for British replacements, while almost half of European businesses expect to reduce their use of UK suppliers.

Some 65 per cent of UK businesses have seen their supply chains become more expensive as a result of the weaker Pound, with 29 per cent re-negotiating some contracts as a result.

When asked about the major challenges facing UK negotiators in the trade talks, 39 per cent said the UK has a weak negotiating position and 36 per cent believe there is a lack of time, but 33 per cent believe there is a dearth of supply chain expertise and knowledge in the UK to draw upon.

CIPS chief executive Gerry Walsh said: “The separation of the UK from Europe is already well underway even before formal negotiations have begun.”

He pointed out that there had already been high profile disputes between British retailers and their suppliers as a result of currency fluctuations.

“We now know that this pattern is being replicated across the UK and is likely to escalate.

“The reshoring of British supply chains in advance of Brexit could provide an excellent opportunity for small businesses looking to win new contracts, but it also comes with significant challenges. Brexit is likely to bring considerable costs for businesses in the UK and Europe; these costs are then going to be passed on to small suppliers and eventually consumers.”

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