The achingly slow progress of the U.K.’s divorce talks with the European Union could already be having a serious effect on suppliers on both sides of the English Channel, an industry body has warned.
According to new research from the U.K.’s Chartered Institute of Procurement and Supply (CIPS), a whopping 63% of EU businesses who deal with British suppliers now expect to move at least part of their supply chain outside the U.K.. That’s up sharply from the 44% who said the same back in May, when the outlook for the Brexit talks was looking slightly less dire.
CIPS’s latest survey also shows that 40% of British companies with EU suppliers are looking to replace them with domestic suppliers. In May, that figure was 31%.
The Brexit schedule would have the U.K. Leave the EU in March 2019, but negotiators have so far been unable to indicate what sort of trading relationship will exist between the two sides at that point. Without a deal clarifying that relationship, there will be no hope of frictionless trade, and a high risk of major backlogs at new and hastily-erected customs points.
To make matters worse for companies that want predictability in their supply arrangements, one in five British firms with EU suppliers “have found it difficult to secure contracts that run after March 2019,” the institute said.
“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,” CIPS CEO Gerry Walsh said. “British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together.”
The Brexit talks will resume on Thursday, but the British government may be distracted by the turmoil caused by sexual harassment scandals—the issue led to the resignation of defence secretary Michael Fallon last week and Damian Green, a key deputy to prime minister Theresa May, is also under investigation.