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Some U.K. Businesses Fear They Won’t Survive Customs Delays After Brexit

Some U.K. Businesses Fear They Won’t Survive Customs Delays After Brexit

Executives at one in 10 U.K. companies fear their businesses could go bankrupt if imports faced 10- to 30-minute customs delays due to Brexit, according to a survey by the Chartered Institute of Procurement & Supply released Wednesday.

The findings from 1,310 supply-chain managers based in Britain and other European countries come a few days after negotiations between the U.K. government and the European Union last week reached an impasse, according to British Prime Minister Theresa May, and crucial issues relating to the country’s exit in March 2019 remain unsolved.

A so-called hard Brexit—a disorderly breakup between the U.K. and the EU—could result in goods held up at British ports, with costly consequences for companies that currently ship components and products without delays. The number of U.K. companies expecting to go out of business increased to 14% if customs delays reached between one and three hours, and to 15%, should customs procedures take between 12 to 24 hours, the survey found.

“Businesses have become used to operating efficiently with exceptionally lean, friction-less supply chains where quick customs clearance is a given,” John Glen, an economist at CIPS, told CFO Journal. “Customs delays would not only affect businesses but would also lead to a shortage of products on shelves.”

Twenty-three percent of U.K. businesses plan to stockpile goods in the future, while 4% have already started to do so. Among those are U.K. pharmaceuticals giant AstraZeneca PLC and German auto maker BMW AG .

Other steps considered by U.K. firms include introducing additional clauses to contracts to increase flexibility and looking for alternative suppliers outside the EU. More than 20% of a total of 850 U.K. businesses questioned for the survey said they are planning to do so. About half of all U.K. companies said they expect to struggle to find the suppliers and skills they need in the U.K. should they be forced to reorganize their supply chains after Brexit.

Almost two-fifths of U.K. businesses that took part in the survey said they can’t make the necessary preparations yet as potential future trade agreements between the U.K. and the EU are still unclear. “The Brexit deadline is drawing nearer and while most businesses are trying to prepare, they are limited on what they can do until a final Brexit deal has been agreed,” Mr. Glen said.