In many ways, Brexit has been a “phoney war” since all the UK has actually done is to state its intention to leave the EU at the end of March 2019. It remains in the single market and customs union and has not had to operate under WTO rules. However, unless the national direction changes, the UK will find itself on its own in less than a year and all the talk of “deep and special relationships; bespoke trade agreements” and the like may prove to be little more than rhetorical tricks. It seems likely that the EU and UK will agree a 21-month de facto extension of the UK’s membership as a “transitional agreement”, but at the moment, what follows that is the cliff edge where the UK crashes out of the EU without a deal. All the “transitional” agreement does is grant the UK (as a third-party nation) an extension to the period where it hopes to negotiate the new arrangement. If a wheel should come off during this process, the UK will find itself hurtling over the cliff in less than a year.
Businesses need to make plans to deal with the likely consequences of Brexit. A study suggests that 11% of UK manufacturers have already lost contracts because of Brexit and one in five businesses is planning to reduce their workforce to deal with Brexit costs. Data provided to The Observer newspaper by the Chartered Institute of Procurement and Supply (CIPS) indicates that 58% of its respondent manufacturing businesses are planning price hikes to offset Brexit costs. The survey involved 20 supply chain mangers and of these 46% said that Brexit costs had already been passed on.
Commenting on the report, John Glenn of CIPS said: “It’s becoming clear that manufacturers can no longer absorb the costs of Brexit, and so the burden of higher prices is spreading to consumers, to suppliers, to clients and reshaping supply chains. Though the sector has moved further towards inshoring, they’re likely to have difficulty finding suitable alternatives in the UK. Businesses that fail to plan ahead and use this opportunity to reduce their costs in supply chains may not survive.”