Most EU businesses preparing to cut UK from supply chains

11/13/2017

Almost two-thirds of EU businesses who work with UK suppliers expect to move some of their supply chain out of the UK as a result of Brexit, a far higher proportion than planned to just a few months ago, a survey from the Chartered Institute of Procurement & Supply (CIPS) concludes.

The CIPS survey found that the figure had risen in the last few months to 63% as firms have become increasingly pessimistic about the outcome of UK-EU talks, compared with 44% in a previous survey published in May 2017.

The survey of 1,118 supply chain managers in the UK and Europe also finds that 40% of UK businesses with EU suppliers have begun the search for domestic suppliers to replace their EU partners, up from 31% in May. However, 26% of UK firms are taking the opposite approach and investing more time to strengthen their relationship with valuable suppliers in the EU.

CIPS says the shift comes as the Brexit negotiations appear to be deadlocked, with half of UK businesses saying they are becoming less confident that the UK and EU will secure a deal which continues to offer ‘free and frictionless trade’.

This uncertainty has meant that 20% of UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019.

Almost three-quarters (73%) of supply chain managers say the UK government’s main priority in the Brexit  negotiations should be keeping tariffs and quotas between the UK and Europe to a minimum.

Meanwhile, according to an Ipsos Mori survey of members of 13 national Chambers of Commerce, 82% of non-UK businesses say they are either “not very” or “not at all confident” that a positive outcome for the UK will be achieved from the Brexit negotiations by March 2019.