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Half of EU businesses looking to ditch UK suppliers after Brexit

Staff Writer |
Businesses either side of the English Channel are preparing contingency plans which could sever supply chains between the UK and EU.

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This is according to the Chartered Institute of Procurement & Supply (CIPS).

A survey of 2,111 supply chain managers found that 32% of UK businesses who work with suppliers on the continent are actively looking for alternative suppliers based in the UK as a response to the referendum. Businesses within the EU are even more advanced in their preparations.

Almost half (45%) of EU businesses who work with UK suppliers are in the process of finding local replacements.

With exit negotiations in their early stages, the most pressing supply chain challenge for UK businesses thus far has been currency fluctuation.

Almost two thirds (65%) of UK businesses have seen their supply chains become more expensive as a result of the weaker Pound, with nearly a third (29%) re-negotiating some contracts as a result.

In the long-term, European supply chain managers appear more confident about their ability to respond to any tariffs that result from the final negotiated settlement by re-shoring their supply chains within the Single Market.

Almost half (46%) of European supply chain managers expect a greater proportion of their supply chain to be removed from the UK, with just over a quarter (28%) intending to re-shore all or part of their supply chains to Europe.

This pessimism is also apparent when it comes to managing the financial costs of Brexit. More than a third (36%) of UK supply chain managers plan to respond by pushing supplier costs lower, while 11% admit that part of their operations may no longer be viable.

Worldwide 67% of respondents felt that the uncertainty surrounding international trade agreements were making long-term plans difficult to confirm.

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