Yahoo Finance Brexit border delays could bankrupt 10pc of firms, survey claims
As many as 10pc of UK businesses would face bankruptcy if goods were delayed by under 30 minutes as a result of Brexit trade friction, new research has claimed.
Businesses are also planning to stockpile goods in order to offset the impact of increased delays. Despite “scarce” and expensive warehousing almost a quarter of companies are preparing to stockpile in the future and some 4pc have already started to do so, according to the research from the Chartered Institute of Procurement and Supply (CIPS).
Almost 40pc of companies said they were unable to prepare at all for the impact of Brexit, as future trade arrangements were shrouded in political uncertainty. The majority of business owners need at least a year to prepare for quitting the EU, once a final deal on the future economic relationship with the bloc is agreed, the CIPS said.
The Government’s Chequers plan, which includes a common rulebook on goods, was considered to be a sensible compromise by more than 40pc of firms. This compared to 31pc who considered it “unrealistic” and 9pc who prefered a no deal outcome from negotiations.
The findings were generated by a survey of more than 1,000 companies from the UK and 140 from the EU, which was completed in September. Respondents were asked how extra checks and paperwork for customs could impact on their companies’ finances.
The longer the delays, the higher the proportion of companies that would risk going bust, the research found.
If delays were to hit as much as up 1-3 hours, some 14pc would go bankrupt. This rose to 15pc if delays totalled 12-24 hours.
John Glen, economist at CIPS said that “even a cursory knowledge of the logistics industry” would mean that observers would be aware that warehousing in the UK was in “very, very scarce supply”. This presented additional costs and challenges for businesses attempting to mitigate the impact of Brexit on their supply chains through stockpiling.
Even a ten minute delay could see two day tailbacks on the M25, Mr Glen warned.
Mr Glen said: “The UK economy could fall of a cliff on Brexit day if goods are delayed by just minutes at the border”.
Mr Glen added that businesses were used to “operating efficiently with exceptionally lean, frictionless supply chains, where quick customs clearance is a given”.
