With 10 days to go until the official Brexit exit day, it would appear that the whole world is none the wiser as to what exactly is going to happen when 29th March finally comes around. Drastically defeating Theresa May’s plans time and time again, what could happen next is anyone’s guess!
How will Brexit affect the British economy?
Philip Hammond’s Spring statement offered a stark warning that Brexit is a ‘cloud of uncertainty’ over Britain’s economy and, although it is ‘robust’, a no deal Brexit could mean ‘higher unemployment, lower wages and higher prices in shops’. A majority of just 4 votes passed the Spelman Amendment last week, stating that parliament doesn’t want a no deal Brexit under any circumstances ever, however, this vote is purely advisory and therefore isn’t legally binding on the government in any way, shape or form.
So, as we edge closer and closer to the Brexit precipice with no definite answer in sight, should companies be stockpiling goods before the deadline? Let’s take a look at how the UK has been preparing for Friday 29th March 2019.
How are supermarkets preparing for Brexit?
There are real fears over food supplies and prices if the UK leaves the EU with no deal. As well as short-term higher food prices, less choice and shortened shelf life for fresh produce go hand in hand with a no-deal Brexit.
Did you know that just under half of the food we consume comes directly from the UK, with a third of our imported products coming from European producers?
Tesco, Marks & Spencer, Morrisons, Sainsbury’s and Asda have all been stockpiling packet and tinned foods for some time now, whist signing a British Retail Consortium-backed letter calling on the government to specifically avoid a no-deal Brexit for the good of the country.
Pet supplier Pets at Home have stockpiled £8m worth of extra supplies in the run-up to Brexit, whilst Premier Foods (Mr Kipling, Ambrosia & Sharwoods brands) are spending £10m on their Brexit contingency plans. And Unilever (Dove, Hellmann’s, Marmite, Surf, Persil, etc) has stockpiled large supplies of Magnum ice-creams in Britain, as well as packaging materials including aluminium, plastics and propellants, amid European import concerns.
But the problem still remains that fresh food cannot be stockpiled due to its short shelf-life, combined with the Brexit timing issue; where the proportion of our crops coming from the EU are at an all time high due to British crops not being ready for harvest at this time of year.
Many British farmers, producers and retailers are understandably fearing the worst, e.g. long delays at ports, high import and export tariff introductions coupled with a lack of migrant workers to pick and process the food. However, a silver lining for retailers may come in the form of being accepted for ‘Authorised Economic Operator’ status (AEO), which simplifies customs procedures whilst offering the possibility of fast-tracked shipments for importers. Morrisons have confirmed that they’ve been accepted for this, but it is currently reported to take up to 12 months to obtain AEO approval from HMRC.
How are pharmaceutical giants preparing for Brexit?
In an effort to reduce mass panic, the UK government has utilised 26 non-disclosure agreements to limit what pharmaceutical companies and other organizations can reveal about Brexit-related stockpiling. However, leaving patients in the dark on key issues regarding their welfare has seen doctors calling for more transparency as fears of medication shortages grow – where patients have begun stockpiling necessities such as insulin and pain killers.
What we do know is that Britain’s biggest drugmaker, GlaxoSmithKline, is spending up to £70m on a wide range of Brexit measures, including obtaining more warehouse space.
Anglo-Swedish multinational AstraZeneca has increased the number of finished medicines available to pharmacies and hospitals in the UK and the EU by 20%, as well as investing up to £50m into building labs in Sweden for additional product testing and stockpiling. The world’s fifth-largest pharmaceutical multinational Sanofi has also acquired more warehouse space in the UK for medical supplies and vaccines that require cold storage.
Government plans include ferries to transport drugs to and from the EU via six new port routes, from Immingham, Felixstowe, Poole, Plymouth, Portsmouth and Ramsgate. Medical isotopes for cancer treatment and other supplies with a short shelf life will also be flown in by chartered plane.
How are car manufacturers preparing for Brexit?
Carmakers are also stockpiling car parts, although the majority produce on a ‘just in time’ basis, with hundreds of trucks carrying auto components into the UK from the EU on a daily basis. For example, BMW in the UK imports around €2bn worth of car parts from the EU each year.
The uncertainty of Brexit is hindering car manufacturers too, with investment by manufacturers almost halving last year to £588.6m. As one of the UK’s flagship industries, exporting eight out of 10 cars abroad to markets including the EU, the US and China, extra costs associated with Brexit are expected to significantly impact this highly competitive industry. Vehicle Brexit contingency plans include Jaguar Land Rover stockpiling parts and Honda planning to halt production for six days from 29th March.
Should consumers stockpile food & goods before 29th March?
With three-quarters of UK warehouse space now at full capacity and supermarkets bracing themselves for looting and riots, it’s unsurprising that one in 10 consumers claim that they have started stockpiling food to prepare for a no-deal Brexit.
Whilst stockpiling emergency supplies might seem the most rational option, this Retail industry official’s quote speaks for itself; “There is a little bit of a worry that if you talk about it too much, you might create the problem you are trying to avoid.”
With Brexit plans literally changing on a daily basis the only thing we can be certain of is uncertainty! What we are sure of is that it’s more important than ever to be proactive and find new business to create opportunities for the future and keep the British economy afloat.