LONDON — British companies are planning to stockpile goods including food, clothes and medicine amid fears that a no-deal Brexit on October 31 would create the “nightmare” of severe shortages in the run-up to Christmas.
Prime Minister Theresa May and other European leaders prevented the United Kingdom leaving the European Union without a deal last week by agreeing to delay Brexit by six months until October 31, 2019.
Since then, UK companies have been calculating how much money they lost preparing for a no-deal exit in the spring, after spending millions on measures like stockpiling goods and hiring staff to handle new customs checks.
The Confederation of British Industry estimates that businesses collectively spent billions of pounds.
Companies are now looking ahead to Halloween, and the prospect of a no-deal Brexit creating an array of costly checks on the UK-EU border just weeks before Christmas, when the demand for many goods rockets.
A number companies have already started making new no-deal plans, Business Insider understands.
One of the UK’s biggest beer companies is set to stockpile “two of three times as much” as it did in the run-up to March 29, to ensure that it meets Christmas demand, an industry figure familiar with the plans told Business Insider.
“It is a nightmare on the goods side,” the source said, adding that there is also the issue of almost all goods being seasonal, meaning many products that were stockpiled for a spring Brexit can’t be re-used later in the year.
The seasonal problem is set to affect the UK’s clothing retailers.
“You might think things like clothes are less problematic,” Pauline Bastidon, Head of Global and European Policy at the Freight Transport Association, told Business Insider this week.
“But fashion changes on a seasonal basis, sometimes on a monthly basis. If they [companies] have stock which they want sell in spring, it won’t be much use to them in the autumn.”
Retailers face another practical challenge in that winter clothing is generally bulkier than clothing sold earlier in the year, meaning that they will need more warehousing space for stockpiling.
Pharmaceutical companies are also planning to stockpile large quantities of certain of goods as Brits are more likely to develop illness and require medicine in the winter compared to other times of the year.
May’s government this month told civil servants to wind down immediate no-deal planning with “immediate effect.”
However, business groups are urging members not to be complacent or overcome with Brexit fatigue.
The FTA’s Bastidon is set to meet with industry figures early next month to discuss the next round of no-deal planning.
She told Business Insider that while “the prospect of any immediate no-deal has gone away” for now, “the more distant prospect of no-deal on October 31 is still very much on everyone’s minds.”
Bastidon added: “The government tells us it’s highly unlikely but where’s the evidence to say that it’s highly unlikely? It’s still the default. Yes it’s not tomorrow so we can breathe a little bit but it could definitely happen.”
Nicole Sykes, the CBI’s Head of EU Negotiations, told Business Insider that UK companies “have spent billions on no deal planning” including stockpiling, relocations, and hiring staff to handle new customs checks.
She said that while the six-month Brexit delay removed the threat of an immediate no-deal, it had not provided businesses with enough certainty to suspend no deal planning or make long-term investments in the UK.
“We also have to consider the impact of lost and delayed investment, especially on future job creation. Business investment across the UK falling for four consecutive quarters and uncertainty has negatively affecting investment.”
“That’s why it’s urgent for MPs to compromise and coalesce around a plan which commands a majority in Parliament, is negotiable with the EU and protects our economy.”
Virendra Sharma MP, supporter of anti-Brexit group Best For Britain, said: “This shows a Halloween no-deal exit from the EU could be devastating for businesses and families up and down the country preparing for the festive period.”
The Labour MP added: “We can’t let the Government play trick or treat with people’s livelihoods.”