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Brexit Uncertainty Is Already Causing Supply Chain Problems, Says Industry Body

The achingly slow progress of the U.K.'s divorce talks with the European Union could already be having a serious effect on suppliers on both sides of the English Channel, an industry body has warned.

According to new research from the U.K.'s Chartered Institute of Procurement and Supply (CIPS), a whopping 63 percent of EU businesses who deal with British suppliers now expect to move at least part of their supply chain outside the U.K.. That's up sharply from the 44 percent who said the same back in May, when the outlook for the Brexit talks was looking slightly less dire.

CIPS’s latest survey also shows that 40 percent of British companies with EU suppliers are looking to replace them with domestic suppliers. In May, that figure was 31 percent.

The Brexit schedule would have the U.K. leave the EU in March 2019, but negotiators have so far been unable to indicate what sort of trading relationship will exist between the two sides at that point. Without a deal clarifying that relationship, there will be no hope of frictionless trade, and a high risk of major backlogs at new and hastily-erected customs points.

To make matters worse for companies that want predictability in their supply arrangements, one in five British firms with EU suppliers “have found it difficult to secure contracts that run after March 2019,” the institute said.

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According to new research from the U.K.'s Chartered Institute of Procurement and Supply (CIPS), a whopping 63 percent of EU businesses who deal with British suppliers now expect to move at least part of their supply chain outside the U.K.. That's up sharply from the 44 percent who said the same back in May, when the outlook for the Brexit talks was looking slightly less dire.

CIPS’s latest survey also shows that 40 percent of British companies with EU suppliers are looking to replace them with domestic suppliers. In May, that figure was 31 percent.

The Brexit schedule would have the U.K. leave the EU in March 2019, but negotiators have so far been unable to indicate what sort of trading relationship will exist between the two sides at that point. Without a deal clarifying that relationship, there will be no hope of frictionless trade, and a high risk of major backlogs at new and hastily-erected customs points.

To make matters worse for companies that want predictability in their supply arrangements, one in five British firms with EU suppliers “have found it difficult to secure contracts that run after March 2019,” the institute said.

Read Full Article