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One in four UK firms stockpiling for Brexit disruption

Aerial view of containers at a loading terminal in the port of Hamburg, Germany August 1, 2018. REUTERS/Fabian Bimmer
Containers at a loading terminal in the port of Hamburg, Germany. Photo: REUTERS/Fabian Bimmer

More than a quarter of UK business chiefs are stockpiling goods and half are building up cash reserves in the run-up to the end of the Brexit transition period.

A member poll by the Institute of Directors (IOD) found 15% had already begun stockpiling goods, products or parts, and another 12% said they planned to do so.

37% said they had already begun putting additional cash aside, and another 13% said they intended to.

The IOD warned Brexit disruption would “compound the pain” of COVID-19 for firms, and called for government vouchers to fund advice or tax relief to cover preparation costs.

It found just 21% of the 958 leaders surveyed last month described their companies as “fully prepared.” Another 21% said they had more to do but would be ready by the end of the year, while another 24% said they were uncertain if they would be prepared.


READ MORE: Startup numbers jump amid economic disruption

Some 14% said they needed new licences or authorisations from EU authorities but had still not done so, the same as the percentage who said they had already carried out this work.

And 8% said they had already or intended to secure additional warehousing space.

The figures provide the latest fresh evidence of a stockpiling surge amid growing fears about economic upheaval after 31 December. They echo similar peaks in stockpiling that eventually proved unnecessary ahead of previous delayed Brexit deadlines last year, causing major headaches for firms.

With prime minister Boris Johnson’s government pursuing a more radical divorce from the EU than his predecessor, firms trading with the EU face significant new long-term, costly barriers even if Britain strikes a trade deal.

READ MORE: Pound dives as COVID-19 restrictions tighten on Brexit deal deadline day

A transition period since Britain left the EU has cushioned the economic impact so far, but its expiry at the end of the year will see Britain leave the EU’s single market and customs union, which maintain frictionless trade.

Thursday marked the passing of a deadline previously set by the prime minister for reaching an agreement, with sterling sinking this week as investor jitters have grown.

But Johnson has said he will now wait until the end of a two-day summit of EU leaders in Brussels on Thursday and Friday before deciding whether to give up talks aimed at securing a trade deal.

The UK government’s push for greater fishing rights in UK waters and reluctance to commit to alignment with wide-ranging EU standards have proved major stumbling blocks, with the EU also refusing to give ground.

WATCH: Brexit deadline as UK delays threat to walk away

"The prospect of no deal would be daunting enough, let alone dealing with it in the middle of a global pandemic. These disruptions won't cancel each other out, if anything they would compound the pain for British businesses,” said Allie Renison, a senior policy advisor at the IOD.

“Financial support as seen in other countries, whether through vouchers to help access advice or through extending tax reliefs to facilitate that adjustment, would give small firms a much better chance of coping."

But she warned much of the information companies needed was still subject to negotiations.

Ed Miliband MP, Labour’s shadow business secretary, said: "It is vital that Boris Johnson delivers the oven-ready trade deal he promised was ready and then answers the questions so many businesses are asking about the future arrangements they need to plan for.

“Businesses desperately need clarity to prepare for the future - and at the moment, with less than three months to go, many sectors are not being given the level of detail they need.”

READ MORE: Brexit economic disruption ‘inevitable’ with worst yet to come