Stockpiling spreads in U.K. economy ahead of Brexit
Households alarmed by reports of potential shortages in the event of a "no-deal" Brexit are beginning to stockpile ahead of the country's scheduled departure from the European Union on March 29
LONDON—Stockpiling of goods ahead of Brexit, already evident among British manufacturing firms uncertain about the path ahead, is coming closer to home.
Households alarmed by reports of potential shortages in the event of a “no-deal” Brexit are beginning to stockpile ahead of the country’s scheduled departure from the European Union on March 29, according to a survey Tuesday by market researcher Kantar Worldpanel.
The firm found that 10 per cent of customers at Britain’s major supermarkets have started preparing for a disorderly Brexit, a scenario that would see tariffs imposed on an array of products coming into the United Kingdom and other restrictions slapped on trade with the EU.
That is not yet enough to have a big impact on supermarket sales, worth around 100 billion pounds (US$132 billion) a year, but it could if Brexit uncertainty persists. It noted that another 26 per cent of shoppers say they are ready to start stockpiling as well.
Kantar, which surveyed over 7,000 customers in early February, found that 61.5 per cent of those that had already begun storing extra goods were focusing on food for their larder. That was by far the top category of items being stockpiled, followed by toilet paper at 47 per cent and medicines at 44.8 per cent. Frozen foods, soft drinks, alcoholic drinks and cleaning products were also in demand.
They survey also found that those who back remaining in the EU are more likely to stockpile, at 14 per cent, against 7 per cent for those backing Brexit.
“Peoples’ attitudes to stockpiling depends very much on their attitudes to leaving or remaining in the EU,” Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel, told The Associated Press.
Britain has been gripped by uncertainty since the country voted in June 2016 to leave the EU. That’s been particularly visible among firms who have had little, or no, idea what the country’s future relationship with the EU would look like and what will happen to their just-in-time supply chains with other firms in the EU. That uncertainty has only increased in the past couple of months since lawmakers overwhelmingly voted down Prime Minister Theresa May’s withdrawal agreement with the EU in January.
Much of the uncertainty could end next week if lawmakers back her revised deal in a new vote. Should they again vote against it, May has said they will have the option to either back a “no-deal” Brexit or seek a delay to the whole Brexit process.
“If ‘no-deal’ is taken off the table by whatever means then I think that’s’ immediately going to put a temporary stop to stockpiling concerns,” said Kantar’s McKevitt.
Businesses, which operate on longer timetables than the average consumer, have had to enact contingency measures over a much longer period of time. That’s been clear in the sharp 3.7 per cent decline in business investment last year and the decision of a number of companies, particularly in the financial sector, to relocate jobs into the EU so they can continue to enjoy the benefits of the single market. Manufacturers, too, are relocating activities—Nissan, for example, partly blamed Brexit uncertainty for its decision to abandon plans to build its new SUV in northern England.
A closely monitored economic survey Tuesday from financial information company IHS Markit and the Chartered Institute of Procurement & Supply found that Brexit-related uncertainty remained by far the most prominent factor acting as a brake on the services sector in February and on the fact that employment numbers declined at the fastest pace for over seven years.
“Once again this month, the lifeblood of the sector continued to leak away with Brexit indecision striking another blow to new orders and employment,” said Duncan Brock, Group Director at CIPS.