Consultancy says more time needed to prepare for no-deal Brexit

John Perry, managing director of supply chain and logistics consultancy SCALA says: “With EU negotiators seemingly ruling out the possibility of a second referendum, Labour demanding customs union membership, and Theresa May still doggedly pursuing her universally unpopular agreement, we seem to be hurtling ever-faster towards a no-deal Brexit.

“Given the current stalemate between all parties, and the potentially disastrous consequences of leaving the EU without a deal, the best possible outcome for British business over the next few weeks would be an extension to Article 50.

“Delaying the deadline until at least the summer would give us the chance to come together to campaign to stay in the customs union, which would be the best-case scenario. As businesses, we’re often reluctant to get involved in politics, and have previously stood to one side. But with so much at stake, we now need to make our voices heard.

“Even if we still face a no-deal Brexit following a delay, the additional few months would have given businesses an invaluable opportunity to prepare themselves as thoroughly as possible. Until recently, a no-deal Brexit was seen as such a remote possibility that many businesses have only just started to put contingency plans in place.

“A January survey by IHS Markit/CIPS found that UK manufacturers had begun stockpiling raw materials at a record pace. An extension would allow them to look beyond stockpiling and put in place more effective, long-term risk-reduction strategies by undertaking a full assessment of their supply chains.

“Given enough time, affected organisations might also be able to achieve Authorised Economic Operator Status before the deadline. The application process takes between five and 12 months, and it’s widely agreed that achieving AEO status is likely to be one of the most effective mitigating factors in any Brexit situation.”

Cranfield University advice

Professor Richard Wilding OBE, has warned UK manufacturers of the risks to the extended supply chain caused by stockpiling raw materials ahead of Brexit.

Wilding warns: “While it might look like a sensible response to uncertainty, this kind of Brexit anxiety will have long-term implications for supply chains and for the UK economy as a whole.”

Wilding concludes: “Organisations and individuals need to look at stockpiling with their eyes wide open. We need more conversations across supply chains to help increase certainty and trust, to determine what’s necessary and what’s overreaction.

“Otherwise stockpiling could be a bigger problem for Britain that even the most chaotic Brexit.”