Financial Times – UK businesses plan to combat no-deal Brexit with £40bn stockpile

September 11, 2018

“Think-tank says fluctuations in inventories makes mini-recession ‘almost inevitable’

 

UK companies will stockpile about £40bn of imports to cope with the impact of a no deal Brexit, according to an assessment of the likely fluctuations in inventories as the country prepares to leave the EU.

 

The Centre for Economics and Business Research, a think-tank, predicted that such a level of stockpiling would boost gross domestic product by half a percentage point in the three quarters up to the March 29 Brexit deadline because of increases in production and processing linked to the additional imports.

 

The flipside is that GDP would then fall by the same amount for the remainder of 2019 as companies run down their inventories because demand would not be met from production. “This makes a post-Brexit mini-recession almost inevitable,” said Douglas McWilliams, CEBR founder.

 

Companies are on alert for the implications of a no-deal Brexit after the government published a series of papers on the impact on sectors should the free flow of supplies from Europe be affected. The low cost of stockpiling, owing to interest rates being modest, also increases the likelihood of companies building up inventories.

 

Drug companies have been advised to stockpile medicines while ministers have been criticised for suggesting the government would ensure there was adequate food supplies but would expect retailers to be responsible for stockpiling.”

 

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