EU Companies’ idea to scale back orders from UK suppliers
The majority of EU Companies plan to draw back orders from UK suppliers because of the sluggish progress of Brexit talks, an analysis of company managers showed on Monday.
63% of non-British European companies assume to move some of their supply chain out of Britain, up from 44% in May, the Chartered Institute of Procurement and CIPS said.
Only 17 months left until Britain is due to leave the EU, the lack of clear movement in the negotiations has elevated fears among executives of a sudden departure with no transition.
Monday’s survey upraised the prospect of disruption for British manufacturers with EU clients.
Last Sunday, the Confederation of British Industry said nearly 2/3 British firms will have implemented Brexit contingency plans by March if Britain and the rest of the EU have not struck a transitional contract by then.
Britain and the EU said last week they were ready to quicken up talks, but CIPS said it was already too late for scores of companies that look likely to have fallen by EU customers.
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“British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together,” spoke Gerry Walsh (CIPS’ group chief executive officer).
“The lack of clarity coming from both sides is already shaping the British economy of the future – and it does not fill businesses with confidence.” Chancellor Philip Hammond said a month ago that a transition deal needed to be struck by early 2018.
CIPS said a 5th of British companies were struggling to secure contracts that spread beyond March 2019 (date Britain is due to leave the EU).
Its survey added to signs that the pound’s drop after last year’s Brexit vote did more damage than good to Britain’s economy.
Mr Hammond is under stress to help British businesses as he prepares for his 22 November annual budget. Manufacturing association EEF advised him to take measures that will boost Britain’s irregular investment performance.
“The chancellor has to offset acute anxiety among companies over Brexit with a budget that reassures business the government will deliver a comprehensive and ambitious industrial strategy,” said Terry Scuoler (EEF chief executive).
EEF suggested that Mr Hammond should increase capital allowances and tax credits for research and design in British corporations.
The CIPS survey of 1,118 supply chain leaders was conducted between 4 September to 5 October. A total of 106 EU-based company with British supply chains took part in the survey.
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