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![]() EU businesses say goodbye to UK suppliers as Brexit bites into key relationships
Nearly two-thirds (63%) 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 according to a survey from the Chartered Institute of Procurement & Supply (CIPS). This is a dramatic shift from May, when just 44% of EU businesses were expecting to move out of the UK. The survey of 1,118 supply chain managers in the UK and Europe also finds that two fifths (40%) of UK businesses with EU suppliers have begun the search for domestic suppliers to replace their EU partners, up from 31% in May. Just over a quarter (26%), however, are taking the opposite approach and investing more time to strengthen their relationship with valuable suppliers on the Continent. 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’, while 35% of UK businesses feel unable to prepare due to the lack of progress on a future trade relationship. This uncertainty has meant that one in five (20%) UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019. Indeed, despite a formal separation still being some time away, nearly one in ten (8%) of UK businesses said their organisation has already lost contracts as a result of Brexit with 14% believing part or all of their organisation’s operations will no longer be viable. Supply chain managers are clear where the Government should focus as the next phase of the negotiations begin with 73% saying keeping tariffs and quotas between the UK and Europe to a minimum should be the main priority for the negotiations. The supply chain cost of Brexit
The cost of preparing for BrexitA quarter (25%) of UK businesses with more than 250 employees* have already spent at least £100,000 preparing their supply chain for the split. These costs come in addition to the daily impact of currency fluctuation with 64% of UK businesses saying this has made their supply chains more expensive to manage. Businesses are still not doing enough to adequately prepare however. Only 14% of UK businesses with EU suppliers feel like they are sufficiently prepared for Brexit. Gerry Walsh, Group CEO, CIPS, commented:
About the Chartered Institute of Procurement & Supply: The Chartered Institute of Procurement & Supply (CIPS) is the leading international body representing purchasing and supply management professionals. It is the worldwide centre of excellence on purchasing and supply management issues. CIPS has a global community of 200,000 in 180 different countries, including senior business people, high-ranking civil servants and leading academics. The activities of purchasing and supply chain professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions packages to improve business profitability. www.cips.org, @CIPSnews. About the survey These findings were drawn from a survey of 1,118 supply chain managers from across the globe who were asked on their views and reactions towards Brexit. The survey comprised of 26 questions and ran from 4th September to 5th October 2017. When mentioning ‘UK businesses’ this refers to UK businesses with EU suppliers, of which there were 702. ‘EU businesses’ are European businesses with UK supply chains, of which there were 106. *’Large businesses’ are those with over 250 employees. Elsewhere, the release refers to businesses of various sizes. For businesses below 250 employees, 2% had spent over £100,000.
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