Daily Management Review

30 Minute Customs Delay Cal Lead To Bankruptcy Risk For One In 10 UK Firms: New Report


30 Minute Customs Delay Cal Lead To Bankruptcy Risk For One In 10 UK Firms: New Report
A new report related to a possible no-deal Brexit in the UK claims that there would be risk of one in 10 British firms going bankrupt because of a delays of only half an hour at UK ports and the Irish border.
The report published by the Chartered Institute of Procurement and Supply (CIPS) says that   there would be massive queues of trucks at British borders because of a significant increase of paperwork and checks to get customs clearance if the UK and the EU fail to come to an agreement for a trade deal before the onset of Brexit in March next year.
The conclusion in the report was based on a survey that was done on more than 1,300 UK and EU-based supply chain managers who are the people who are in-charge of getting goods through customs for their respective companies. The report claimed that any delay between 10 and 30 minutes at the customs border could result in bankruptcy of about one tenth of the UK firms.
This warning in the report is of significance because of the increasing possibility of the UK and the EU not arriving at a trade agreement for Brexit with just a little over six months remaining fop the official separation of the UK from the EU. The situation has also become more acute after the RU summarily rejected a Brexit proposal put forward by UK Prime Minister Teresa May last week.
Warnings of losses because of stricter border controls have been issued by a number of major UK firms. Such concerns have also been expressed by a number of auto makers such as Honda and Jaguar Land Rover because these companies depend on significant auto parts being imported from other EU countries for assembly of cars and other vehicles.
JLR has cut working hours. On the other hand, Honda has said that the it would have to incur additional costs of tens of millions of pounds for about 60,000 additional paperwork for importing auto parts into eth UK if there is no deal for Brexit  
“It’s such a potential car crash,” said John Glen, economist at CIPS, adding: “Common sense has got to prevail. We need to have a two-year transition period and to get something sorted out during that. The idea of day-one no-deal is just crazy.”
About 25 per cent of British firms have finalised plans for stockpiling of goods because of concerns over border delays and related shortages, the CIPS survey also found, while 4 per cent of the respondents have already started to stockpile goods.
There would be severe consequences of Britain economy because of a no-deal Brexit which would result in tougher border controls, import tariffs and other barriers to trade, warned economists. One economist claimed loss of 1 billion pound a year to the economy in such a scenario.
The current queues at ports can triple be an increase of just two extra minutes of checks, according to estimates of researchers at Imperial College London.
The warnings have however been dismissed by supporters of Brexit and have suggested the government to walk away from the negotiations for a deal. They have instead suggested forging free trade agreements with individual countries.