Put fingers in ears and repeat 'la la la la la I'm not listening to you'
European businesses turn their backs on British suppliers
European businesses turn their backs on British suppliers
Almost half of European businesses with British suppliers are finding replacements elsewhere in the EU, according to research underlining the threat that Brexit poses to exports.
The Chartered Institute of Procurement and Supply, after surveying more than 2,000 supply chain managers, said that its findings demonstrated that the “separation from Europe is already well under way”.
Bosses are not waiting for the outcome of Article 50 talks before shielding their businesses from the potential impact of tariffs, customs procedures and regulatory hurdles.
The institute said that European businesses were more confident that they would be able to adjust to a hard Brexit by “reshoring” their supply chains within the single market. Forty-six per cent said that they expected a greater proportion of the supply chain to be outside Britain, with 28 per cent saying that they intended all of their supply chain to move to the Continent.
On the other hand, 32 per cent of British businesses with suppliers in the bloc are looking for replacements within the UK.
Britain’s exporting industry is highly dependent on importing intermediate goods, or components for other products, from the European Union, according to OECD data.
Britain imports intermediate goods worth the equivalent of 17.6 per cent, higher than most other big economies. Almost half of Britain’s trade in intermediate goods and imports are with the EU, according to a study by Alicia García-Herrero and Jianwei Xu for the Bruegel think tank.
Gerry Walsh, the institute’s chief executive, said: “Diplomats either side of the table have barely decided on their negotiating principles and already supply chain managers are deep into their preparations for Brexit. Both European and British businesses will be ready to reroute their supply chains in 2019 if trade negotiations fail and are not wasting time to see what happens.
“The separation of the UK from Europe is already well under way.”
The threat posed by Brexit to international supply chains was demonstrated by Nissan’s hesitance to invest in producing its new Qashqai cars at its plant in Sunderland. It committed to the investment after receiving assurances from the government that its competitiveness would not be damaged by Britain’s withdrawal.
The British car industry, in particular, is facing changes to its supply chain. The Society of Motor Manufacturers and Traders calculates that on average 41 per cent of a car leaving a British factory is made up of components manufactured in the UK.
Mr Walsh said that companies were being forced to renegotiate contracts because of the slump in sterling.
“We have already seen high-profile disputes between British retailers and their suppliers as a result of currency fluctuations,” he said. “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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The Chartered Institute of Procurement and Supply, after surveying more than 2,000 supply chain managers, said that its findings demonstrated that the “separation from Europe is already well under way”.
Bosses are not waiting for the outcome of Article 50 talks before shielding their businesses from the potential impact of tariffs, customs procedures and regulatory hurdles.
The institute said that European businesses were more confident that they would be able to adjust to a hard Brexit by “reshoring” their supply chains within the single market. Forty-six per cent said that they expected a greater proportion of the supply chain to be outside Britain, with 28 per cent saying that they intended all of their supply chain to move to the Continent.
On the other hand, 32 per cent of British businesses with suppliers in the bloc are looking for replacements within the UK.
Britain’s exporting industry is highly dependent on importing intermediate goods, or components for other products, from the European Union, according to OECD data.
Britain imports intermediate goods worth the equivalent of 17.6 per cent, higher than most other big economies. Almost half of Britain’s trade in intermediate goods and imports are with the EU, according to a study by Alicia García-Herrero and Jianwei Xu for the Bruegel think tank.
Gerry Walsh, the institute’s chief executive, said: “Diplomats either side of the table have barely decided on their negotiating principles and already supply chain managers are deep into their preparations for Brexit. Both European and British businesses will be ready to reroute their supply chains in 2019 if trade negotiations fail and are not wasting time to see what happens.
“The separation of the UK from Europe is already well under way.”
The threat posed by Brexit to international supply chains was demonstrated by Nissan’s hesitance to invest in producing its new Qashqai cars at its plant in Sunderland. It committed to the investment after receiving assurances from the government that its competitiveness would not be damaged by Britain’s withdrawal.
The British car industry, in particular, is facing changes to its supply chain. The Society of Motor Manufacturers and Traders calculates that on average 41 per cent of a car leaving a British factory is made up of components manufactured in the UK.
Mr Walsh said that companies were being forced to renegotiate contracts because of the slump in sterling.
“We have already seen high-profile disputes between British retailers and their suppliers as a result of currency fluctuations,” he said. “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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