Brexit, if it is a no-deal sort, will cause many problems for retailers and suppliers alike. Space for warehousing and, simply, cash to stockpile the items is proving to be difficult. New customs tariffs in a no-deal Brexit situation show that 22% of goods will have new tariffs payable when coming from the EU. An import VAT will also need to be paid on goods worth up to £135 when sold to UK buyers.
Delays are also to be expected at the borders to the UK as new customs checks start to be made. This will have a direct effect on the value of sterling. All of this is according to internetretailing.net, who reported that goods imported after Brexit will most likely take longer to arrive, costing more in sterling for retailers, the manufacturers who supply them and, ultimately, customers.
UK suppliers and retailers are stockpiling goods to prepare for a no-deal Brexit, or any Brexit, for that matter. A business advisor called Duff & Phelps say that FMCG (fast-moving consumer goods) manufacturers are stockpiling raw materials for production and finished goods to make sure they can meet customer demand. However, the director of restructuring advisory at Duff & Phelps, Jimmy Saunders says: "This is placing a further burden on working capital which is locked up in stock at a time when investors are cautious about increasing lending. In the event of a no-deal Brexit, which is still very much on the table, suppliers will also have to deal with fluctuations in forex and additional tariffs which could impact raw materials coming in from Europe. Navigating the uncertainty of Brexit and the commercial relationships with supermarkets are going to be challenging tasks for manufacturers and suppliers of FMCG. However, with clarity coming imminently on the nature of the UK’s future relationship with the EU, there is optimism that businesses should be able to start making plans for investments in driving productivity and adapting to the UK’s new business landscape.”
Logistics & Material Handling
Midland Pallet Trucks, a materials handling business, said that whilst stockpiling in March and April gave a small but positive boost to the economy in the UK, its unlikely to have the same effect at October's end, when warehousing will have already hit capacity ahead of peak trading. Their managing director, Phil Chesworth said, “Clearly, stockpiling is far from over, but we are keen to reiterate that stockpiling is a plaster on a wound, and that we must look at longer term solutions to prepare for whatever situations we may find ourselves navigating post-Brexit.”