Businesses look to ditch EU suppliers

Almost half of UK businesses are actively looking to work with more domestic suppliers to reduce their exposure to EU supply chains, according to a new survey.

The Chartered Institute of Procurement & Supply (CIPS) said 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.

It noted that the shift has come as 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’.

Food supply chains are inextricably linked to the EU single market with nearly 40% of the UK’s total supply of fruit and vegetables and nearly 55% of its supply of pigmeat sourced from member states.

UK businesses are also finding it challenging to retain business with EU customers. CIPS, which surveyed over 1,000 supply chain managers in the UK and Europe, said that uncertainty over future trading arrangements with the EU has meant that one in five (20%) UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019, with nearly one in ten (8%) UK businesses reporting they have already lost contracts as a result of Brexit. A further 14% believe part or all of their organisation’s operations will no longer be viable, while almost two thirds (64%) said they are suffering extra costs as a result of currency fluctuation.

“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,” said Gerry Walsh, group CEO of CIPS. “British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together.”

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