British exporters could lose billions after two-thirds of EU firms saying they expect to move part of supply chain out of UK

British exporters have been put on notice that they could lose billions of pounds worth of business after almost two-thirds of EU businesses who work with UK suppliers warned they expect to use more firms inside the single market after Brexit.

The Chartered Institute of Procurement & Supply (CIPS) said 63% of the EU companies surveyed last month said they planned to move some of their supply chain out of the UK as a result of the decision to leave the single market and customs union. The results represent a large increase on a survey in May, when 44% of EU businesses said they were preparing to switch.

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The survey of 1,118 supply chain managers in the UK and Europe also found that 40% of UK businesses were adopting a similar stance and had begun the search for domestic suppliers to replace their EU partners, up from 31% in May. The findings will boost remainers’ arguments that the cost of Brexit will be a steep decline in trade with the single market.

Business leaders have warned the government that the uncertainty about Britain’s relationship with the rest of Europe had forced its members to put in place contingency plans that could lead to many moving some or all of their business to Ireland, France, the Netherlands or other parts of the EU.

Last week a survey by Ipsos Mori of foreign businesses operating inside the UK found that 82% were either “not very” or “not at all confident” that a positive outcome for the UK will be achieved from the Brexit negotiations by March 2019. Just one in eight (13%) took an optimistic view on the likely outcome of the negotiations.

The Confederation of British Industry, which is expecting a record attendance at its annual conference on Monday, said that 60% of its members will have acted on contingency plans if Britain’s relationship with the EU remains unclear by next March. It said 10% of firms have already started to shift some of their business overseas to protect supplies or service vital markets that could be the subject of tariffs or border controls following Brexit.

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The CBI director general, Carolyn Fairbairn, singled out broadcasters based in the UK as a group that would be hit by a failure to agree common tariffs and rules. She said many were looking to base themselves inside the single market to comply with EU rules.

The CIPS said just over a quarter (26%) of UK businesses had taken the opposite approach and were “strengthening their relationship with valuable suppliers on the continent”.

Gerry Walsh, the chief executive of CIPS, said: “The Brexit negotiating teams 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.”

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The uncertainty over Brexit talks has meant that one in five UK businesses with EU suppliers have found it difficult to secure contracts that run after March 2019, he said.

“Indeed, despite a formal separation still being some time away, nearly one in 10 (8%) of UK businesses said their organisation has already lost contracts as a result of Brexit with 14% believing part or all of their organisation’s operations will no longer be viable,” he added.



Supply chain managers were clear where the government should focus as the next phase of the negotiations begin, with 73% saying keeping tariffs and quotas between the UK and Europe to a minimum should be the main priority for the negotiations.