24th November 2017.

Brexit Fear Leads To Stockpiled Goods

Businesses in the UK are stockpiling goods because of worries that Brexit could disrupt their international supply chains, according to consultants KPMG.

Warehouse space has been filling up at record rates, with companies over-ordering by 15-20 per cent, says KPMG partner Mike Mills.

“Companies want to ensure they have enough stock in the country to meet demand in case they cannot get more in quickly”, he added.

If the UK leaves the single market in March 2019, the proposed Brexit date, the number of shipments needing customs checks could grow dramatically, potentially causing delays.

Horizon International Cargo, which manages supply chains and ecommerce sales for a number of companies, confirmed the trend.

Paul Williams, Horizon’s group commercial director said: “Companies want a buffer in case disaster hits and customs systems that are 30 years old fail to do the job.”

It’s understandable that companies are feeling the pressure from prolonged Brexit uncertainty. Nonetheless, Mr Mills from KPMG warns that this “hoarding” puts a strain on working capital and could tip companies into financial distress.

“Working capital levels are going up, interest rates are going up, sales are going down because of uncertainty. Quite a few businesses will be warning their lenders that they are in trouble”.

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