UNITED KINGDOM: Companies prepare for a No Deal Brexit but not without reservations
Wine, sausage, insulin and toilet paper: less than a month from the expected Brexit date, UK companies are speeding up their preparations and stocking up everywhere, with the food industry particularly concerned about administrative hassles and delays in customs.
German soap and paper manufacturer Wepa, the UK’s largest supplier, has announced that it has accumulated enough to hold a seat: 3.5 million rolls. The British can blow.
FAQ for SMEs
“Get ready for Brexit” has become a real British government mantra, repeated on billboards and posters while authorities hold information fairs across the country for SMEs.
Prime Minister Boris Johnson has made his main campaign promise an exit from the European Union on October 31st, “whatever happens,” agreement or not. However, he has just proposed new paths of negotiations to the EU – welcomed chilly – and documents presented to the courts Friday seem to indicate that he could ask for a postponement despite his denials.
Towards a shortage of medicines?
In front of this thick fog, many companies store as much material as possible. The government itself is predicting that some foods – including perishable products such as fruit – may be lacking just as some vital drugs like insulin, in case of Brexit without agreement.
Small businesses such as Watson and Pratt’s retailer and wholesale seller of organic products have done their best to immerse themselves in the arcades of customs formalities that they have never had to confront with the European single market …. but admit that they will be powerless in the face of the potential delays of delivery trucks at customs.
Chaos is coming
“The big problem is that there is still much uncertainty,” says Rosalind Sharpe of the Center for Food Policy Research at the University of City, University of London. “Companies do not really know what will happen and in this context, they are preparing as they can,” she adds. “Steps have been taken but there is no doubt that if we leave the EU on October 31 without an agreement, there will be chaos in the ports, there will be shortages,” she insists.
The governor of the Bank of England Mark Carney acknowledged last month “progress in the preparations” but still expects a total contraction of UK GDP that could reach 5.5% in case of exit without agreement.
The weakness of the pound does not help
“We are fully prepared but we are worried about rising costs,” says wine merchant Daniel Lambert, explaining that his import costs have already increased significantly because of the weakness of the pound sterling, which has lost about 15% since the referendum on Brexit. However, he fears an increase in logistics costs – “companies will pay extra time to customs”.
Ben Pratt, one of the leaders of Watson and Pratt’s, points out that it may be necessary for the first time to call a customs officer, a significant burden for an SME. As for the potential delays in the delivery of fragile products: “will the consumer pay the same price” if salads or nectarines get blackened after nights blocked at border crossings?
And to warn: there will not necessarily always be tomatoes every day of the year, or strawberries at Christmas.