London, UK: The coronavirus epidemic has led to reducing stockpiles, redeployment of Brexit-related staff and cashflow seriously depleted, the Institute for Government warns in a new report.
The report says 61% of businesses surveyed had made no preparations for the end of the Brexit transition period on 31 December.
Last-minute preparations will be difficult for many sectors, as coronavirus-related government support is wound down and potential for stockpiling is diminished as warehouses fill up ahead of Christmas, it says.
“The coronavirus crisis has not only held up progress on Brexit preparations but, in some areas, has actually set businesses back,” it warns in its report.
“Firms reeling from the economic consequences of coronavirus are poorly placed to prepare for Brexit: in many cases, they’re in a worse position than in the months leading up to the potential no-deal in October 2019. As the government’s own data shows, the majority of firms have not even begun to prepare.
“Many businesses and public bodies have run down stockpiles built up ahead of a potential no-deal Brexit last year, either because it was not economically viable to maintain excess supplies or to mitigate the disruption caused by gaps and delays in supply chains caused by the coronavirus. Many firms have eaten into ‘rainy day’ cash reserves just to stay afloat – money that could otherwise have been used to prepare for Brexit.”
Ministers recently conceded that many checks for goods coming into Britain would not be enforced when the transition period comes to an end, despite a previous insistence that controls would be in place. However, ministers have continued to stress that there will be no extension of the transition period.
There are now mounting calls for sector-specific help ahead of the end of the transition period. The cost of extra customs declarations could be as much as £7bn a year, according to some estimates.
Dominic Goudie, head of international trade at the Food and Drink Federation, said: “There are many things that businesses can and should be doing to prepare, and we are helping ensure our industry has the very best chance of being ready as further clarity emerges from the government about what will be required.
“Many producers have been seriously affected by the closure of the hospitality sector, while staff have been redeployed from Brexit preparations to focus on the Covid-19 pandemic.
“Businesses have seen their cashflow badly impacted, and this risks further reducing their limited capacity to stockpile short shelf-life ingredients and finished products.”
