EU Businesses Look to Cut Orders from the UK in the Lead Up to Brexit
The slow progress of the ongoing Brexit negotiations is forcing more businesses to consider cutting back on their orders from UK suppliers. With the ongoing uncertainty over what type of deal will be reached between the UK and the European Union, and only 17 months left, the lack of progress and leadership seen so far in the process is causing concern amongst companies.
There is fear that the delays will mean the UK’s departure from the union with no transition period and businesses are looking to cut ties now rather than face the possibility of post-Brexit tariffs. According to a recent survey, 32% or UK businesses are looking to reduce their EU suppliers, and a massive 46% of EU businesses are looking to use UK suppliers less.
Businesses are losing confidence in negotiations
The UK’s weak position for negotiations is seen as the biggest problem when coming up with a new trade deal, and it’s estimated 36% of manufacturing businesses in the UK are planning to try and negotiate lower supplier prices in response the talks. With the UK and the EU struggling to reach a deal, confidence among businesses seems to be declining. The Confederation of British Industry has said the two thirds of British firms are looking already looking at contingency plans if a transitional deal hasn’t been reached by March next year.
Britain is keen to speed up its talks with Brussels in order to keep European customers, but according to the CIPS, it’s already too late for many businesses who feel it’s already been left too late. The chief executive of CIPS claims that “British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together. The lack of clarity coming from both sides is already shaping the British economy of the future – and it does not fill businesses with confidence.” CIPS also confirmed that a fifth of businesses were struggling to secure deals past the March 2019 Brexit deadline.
Britain is pushing for a deal
The British Chancellor Phillip Hammond has agreed that more needs to be done to negotiate a deal with the European Union. In an interview last month he said that the government is looking to confirm a transitional deal by the beginning of 2018. “The chancellor has to offset acute anxiety among companies over Brexit with a budget that reassures business the government will deliver a comprehensive and ambitious industrial strategy,” – EEF chief executive Terry Scuoler. The EEF has also recommended that Mr Hammond should take extra measures like boosting capital allowances and tax credits for research and design projects in British companies.