Stockpiling: What will happen to goods and trade after Brexit?

Friday, July 27, 2018

Stockpiling has become a buzzword in the last few days since Prime Minister Theresa May and Brexit Secretary Dominic Raab acknowledged that ensuring the UK has adequate food supplies in the event of a no-deal Brexit was a concern. 

May said the government is not stockpiling, and urged the public to take "reassurance" from the fact the government was preparing for a worst-case scenario.

The British Retail Consortium has condemned the idea of stockpiling, saying its "not a practical response". 

"Industry has not been approached by government to begin planning for this. Retailers do not have the facilities to house stockpiled goods and in the case of fresh produce, it is simply not possible to do so," they said in a statement.

"Our food supply chains are extremely fragile and this is yet further demonstration of the need for an agreement on the backstop to ensure frictionless trade is maintained after the 29 March 2019."

But what will the actual, noticeable effects of a no-deal Brexit be? Is stockpiling necessary for individuals as well as large companies?

Professor Iain Begg, Research Fellow at the European Institute, London School of Economics and Political Science, answers some common questions.

 

What kind of goods could be affected by Brexit?

"The first thing to say is that it's not dramatic, the flow of goods may be inhibited to some degree if no-deal was the outcome. But that's not going to stop things flowing through the British ports like Dover and Bristol in the way they do now.

What's more likely is that anything coming in or out of this country may encounter delays.

"The reason that is a matter of concern for the likes of the health services, is that some medicines or other medical products have limited shelf life, and if they're held up at a port or held up in a warehouse while awaiting clearance that's going to be difficult.

That might apply to certain perishable foods if they're not frozen.

It's a matter of potential delays rather than the need to stock up on things because they simply won't be available."

 

Do we need to worry about food supplies?

Listen to Eamonn Holmes and Saira Khan discussing stockpiling with People's Vote co-founder Femi Oluwole

"That was something that used to happen from time to time in the 1970s, and I think we've moved on from that.

“If the belief takes hold that there's going to be a shortage of something as ridiculous as tinned beans - if everyone goes out and buys tinned beans, then there's going to be a shortage.”

 

Can't companies stockpile non-perishable goods to avoid delays?

"Warehouse capacity is being bought up at a tremendous rate; even then you're losing money as a manufacturer because instead of your box of components arriving as you need it, you have to store it which costs money.

“You have to finance the stock you're storing because you need to buy it in advance.

“All these things that start to accumulate become a threat to the viability to the British manufacturing sector."

 

If we get a no-deal Brexit, does trade have to pause while new terms are worked out?

"No, in theory we would revert to World Trade Organisation's terms, and that could happen overnight.

“It may cause logistical nightmares for Her Majesty’s Revenue and Customs because they would need to transform systems - but we already do this for the best part of half our trade, which comes from the rest of the world.

"If you buy something from the US, Hong Kong, China or India it's subject to that kind of customs scrutiny already, so the systems are in place. They would needed to be multiplied in size.”

 

What kind of Brexit would cause the least disruption to trade of goods?

“Some variation on the Chequers deal beats no-deal any day.

"What that intends to do is - to use the expression of the White Paper - introduce frictionless trade. The more friction you introduce to trade, the more likelihood of delays.

“If a particular lorry is held up on something we can't anticipate and that contains those lifesaving drugs, that's when you get into difficulty."

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