In a survey of 1,118 supply chain managers, 63% said they expected to move some of their supply chain out of the UK, compared with 44% in May.
The survey also found that 40% of UK companies with EU suppliers have begun to search for domestic suppliers, with just over a quarter (26%) investing more time in strengthening their relationships with suppliers on the continent.
The shift comes as half of UK businesses said they were becoming less confident that the UK and EU will secure a deal which continues to offer ‘free and frictionless trade’.
A further 35% of UK businesses said they felt unable to prepare due to the lack of progress on a future trade relationship.
‘Already too late for scores of businesses’
CIPS group ceo Gerry Walsh said: “The [government’s] Brexit negotiating team 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.
“British businesses simply cannot put their suppliers and customers on hold while the negotiators get their act together.”
The lack of clarity over Brexit negotiations – with deals being made behind closed doors – was not filling British businesses with confidence, claimed Walsh.
He added: “The success of the negotiations should not be measured on the final deal only, but on how quickly both sides can provide certainty. The clock is ticking.”
Difficult to secure contracts
CIPS found that 20% of UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019, the day the UK officially leaves the EU, because of this uncertainty.
Nearly one in 10 (8%) of UK businesses said their organisation had already lost contracts as a result of Brexit, while 14% believed part or all of their organisation’s operations will no longer be viable.
A quarter (25%) of UK businesses with more than 250 employees said they have already spent at least £100,000 preparing their supply chain for the split. However, only 14% of UK businesses with EU suppliers said they were sufficiently prepared for Brexit.
FoodManufacture.co.uk has asked the Department for Exiting the European Union for a response to the survey.
Meanwhile, food manufacturers and retailers in the UK need to start preparing their contingency plans for a ‘hard’ Brexit – in which no deal is agreed with the EU – in order to mitigate the risks they face, warned a leading supply chain expert.