13 November 2017

Nearly two-thirds of EU businesses who work with UK suppliers expect to move some of their supply chain out of this country as a result of Brexit, according to a survey from the Chartered Institute of Procurement and Supply (CIPS).

The increase since May 2017, when just 44% of EU firms were expecting to move out of the UK, is probably caused by the apparent deadlock in the Brexit negotiations.

The pessimistic view is shared in the UK where 50% of businesses told CIPS that they are becoming less confident that the two sides will secure a deal which continues to offer "free and frictionless trade".

The survey of more than 1100 supply chain managers in the UK and Europe also revealed 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.

On a more positive note, a quarter (26%) are taking the opposite approach and investing more time to strengthen their relationship with valuable suppliers on the Continent.

A similar percentage (25%) of UK businesses with more than 250 employees have already spent at least £100,000 preparing their supply chain for the split.

CIPS Group CEO, Gerry Walsh, said: "The Brexit negotiating teams promise that progress will be made soon, but it is already too late for scores of businesses who look like they will be deserted by their European partners. British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together."

As the latest phase of the negotiations begin in Brussels, supply chain managers have sent a clear message to the Government, with 73% saying that keeping tariffs and quotas between the UK and Europe to a minimum should be the main priority.