Industry bosses today called on Government to thrash out a post-Brexit deal, warning that the cash crunch caused by coronavirus had left businesses unable to stockpile.
Manufacturers, retailers and their suppliers are facing the prospect of a no-deal Brexit, but without the firepower to stockpile to ensure goods continue to flow as they did last year before an anticipated cliff-edge Brexit.
Talks between the UK and EU stalled last week. The next round of negotiations kicks off on September 7 with October the deadline for an agreement to be ratified before the end of the transition period this year.
The ADS, which represents more than 1100 UK businesses operating in the aerospace, defence, security and space sectors, warned a “disruptive Brexit is an unwelcome additional challenge” to a sector thrown into crisis by the grounding of the aviation industry in lockdown.
ADS chief executive Paul Everitt said: “Supply chain companies across the UK are focussed on survival and the crisis has put severe pressure on cashflow, restricting their ability to rebuild the stockpiles that were their primary mitigation measure.
“It is important that the Government and the EU work to reach a deal that avoids any further damage. A no-deal Brexit would cause industry in the UK and in Europe further damage.”
Retailers could also be squeezed, as the Covid outbreak has deterred shoppers from physical stores, and ratcheted up demand for warehouse space to service online customers.
Andrew Opie, director of food and sustainability at the British Retail Consortium, said: “Retailers continue to face unprecedented challenges after months of store closures, slow sales and increased costs. As the end of the transition period draws closer, retailers are working incredibly hard to mitigate the disruption that is likely to arise from leaving the EU single market.
“However, with retailers focussed on preparing for the all-important golden quarter, warehouses will be at full capacity in the run up to Christmas leaving little room to build up additional supplies ahead of the 1st January. A no-deal Brexit at the end of the year would result in price increases from tariffs and reduced consumer choice.”
The issue is likely to affect any industry with “just in time” speedy supply chains. The Food and Drink Federation has said suppliers impacted by the closure of the hospitality industry may struggle if they don’t have the cash to stockpile short shelf-life ingredients or finished products.
Security of supply of medicines has been a key issue for Government, and this month Steve Oldfield, chief commercial officer at the Department of Health wrote to suppliers asking them to “stockpile to a target level of six weeks’ total stock on UK soil”.
David Watson, ABPI’s interim executive director for commercial policy, said the industry needed support from Government to plan an end to the transition period, after months of strain to ensure drugs to treat Covid patients were still available.
He added: “Detailed guidance is still urgently required from Government on issues like freight capacity, ferry routes and the Northern Ireland Protocol.
“Coronavirus has only strengthened our belief that the best possible outcome is for both sides to reach a deal that includes an MRA to protect patients and public health.”
The pharmaceutical industry has called for negotiators to seek a Mutual Recognition Agreement – which would see both sides accept each other’s drug safety testing and inspections before export–in order to avoid duplication, supply chain disruption or delays to patient access to medicine.