Supply chain chiefs at 1,300 surveyed firms say firms are already stockpiling parts amid fear of no-deal Brexit

This article is more than 2 years old

This article is more than 2 years old

Delays of only half an hour at UK ports and the Irish border would risk one in 10 British firms going bankrupt, according to a report laying bare the severe risk to the economy from no-deal Brexit.

According to the Chartered Institute of Procurement and Supply (CIPS), failure to reach a deal with Brussels before March could trigger massive queues of trucks at British borders from a vast increase in paperwork and checks to clear customs.

From a survey of more than 1,300 UK and EU-based supply chain managers, the personnel responsible for navigating customs controls for their companies, a tenth at UK firms said it would risk bankruptcy if goods were delayed by between 10 and 30 minutes at the border.

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The warning comes amid the increasing likelihood of Britain crashing out of the EU without a deal in little more than six months time, after Theresa May failed to win support for her Brexit plan from European leaders and said both sides had reached an impasse.

Several major UK firms have warned of the risks from tougher border controls, including the retail chain Next, and carmakers such as Honda and Jaguar Land Rover who rely on thousands of parts arriving from the EU each day.

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JLR has cut staff working hours, while Honda has said a no-deal Brexit could add 60,000 extra pieces of paperwork for imports and exports to the UK while costing the firm tens of millions of pounds.

“It’s such a potential car crash,” said John Glen, economist at CIPS, adding: “Common sense has got to prevail. We need to have a two-year transition period and to get something sorted out during that. The idea of day-one no-deal is just crazy.”

The CIPS survey also found almost a quarter of British businesses are planning to stockpile goods for fear of border delays and shortages of goods, while 4% are already starting to do so.

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Economists have warned tougher border controls, import tariffs and other barriers to trade in the event of no-deal Brexit would have severe consequences for the economy, with one consultancy estimating the cost at around £1bn per year.

Researchers at Imperial College London estimate just two extra minutes of checks could more than triple the existing queues at ports, potentially leading to motorway tailbacks in Kent up to 29 miles long.

Leading Brexiters have dismissed the warnings as scaremongering and urged walking away from negotiations without a deal and striking free trade agreements around the world instead.

Ministers have also attempted to downplay the concerns by suggesting they could relax efforts to collect border taxes to maintain the free movement of imports and exports in the event of no-deal.

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Disruption would be costliest around the port of Dover, where about 17% of the UK’s entire trade in goods worth up to £122bn was handled last year. Alongside the Eurotunnel rail link at Folkestone, more than 4m trucks are processed around this part of south-east England each year.

There are precedents for disruption, including Operation Stack on the M20, which forced trucks to a standstill in 2015 amid tunnel fires and industrial action in Calais. Typically used for a few days each year, it had a lengthier impact three years ago when 7,000 trucks were stranded, taking 36 hours to work their way through.

Some food products did not make it to market because they went off in the queue, while others arrived so late that there were late penalties. Rolls-Royce was forced to delay its production line when goods did not arrive in time.