Anger as ‘Nightmare’ Brexit Delay ‘Screws’ U.K. Firms
Anger as ‘Nightmare’ Brexit Delay ‘Screws’ U.K. Firms
(Bloomberg) --
For Pooch & Mutt, the U.K.’s hesitation by the Brexit door is more than an annoyance; it’s costing real money.
The British maker of superfoods for pets built up about 400,000 pounds ($520,000) worth of extra product as it prepared for the potential disruption of a no-deal Brexit on March 29 and April 12. Now that the split has been delayed a second time, the supplier to Waitrose supermarkets, grocer J Sainsbury Plc and Pets at Home Group Plc needs a loan to cover the cost of its stockpile.
“It just screws us,’’ said founder Guy Blaskey, saying the storage expense means less money to hire staff. “Until we know what’s going on, we need to keep our stock levels high.’’
While some prefer to put off a messy no-deal exit this week, British companies still face the prospect of a further six months of uncertainty after U.K. and European Union negotiators agreed to push back the Brexit date to October 31. Doubt over Britain’s future relationship with the its largest trading partner has weighed on investment and cost millions of pounds in contingency planning.
“It’s a bit of a nightmare,’’ said Neil Palmer, operations director at Norton Hydraulics Ltd., a London-area maker of hose fittings for manufacturers. The company is keeping about 250,000 pounds worth of extra stock imported from Italy, and plans to deplete some in the next few months before building it up again later in the year.
“It’s going to be two years in a row of stockpiling from August onwards to counteract the uncertainty of what’s going on,’’ Palmer said. “It’s just going to take more off the bottom line.’’
The volatility and weakness of Britain’s currency has also been a headache for importers, pushing up prices. For Helen Wang, whose London-based Abakus Foods makes healthy snacks from jujube fruit and hickory nuts imported from South Korea and China, that means more conversion costs.
“It’s just completely out of control,’’said Wang, whose products are sold in Amazon.com Inc.’s Whole Foods markets and through Ocado Group Plc. “We already operate on a very thin margin.’’
Big corporations are resetting plans, too. Having increased stockpiles of non-perishable goods in warehouses and drawn up alternative transport routes for bringing items in, supermarket Tesco Plc will now run down some of its supply, Chief Executive Officer Dave Lewis said at a press conference Wednesday. The grocer will revisit its contingency plans later in the year, he said.
The top priority for businesses is that politicians don’t squander the extra time granted by the EU’s extension, said Adam Marshall, director general of the British Chamber of Commerce.
“It would be a disaster for business confidence and investment if a similar late-night drama is played out yet again in October,” he said in an emailed statement. “Frustration with this seemingly endless political process is palpable.”
--With assistance from Ellen Milligan.
To contact the reporter on this story: Joe Mayes in London at jmayes9@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, John Lauerman, Eric Pfanner
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