Member Article

Perfect storm of supply chain issues threatens a winter of discontent, says UK mid-market

As major disruption to supply chains continues across the UK, Grant Thornton UK LLP’s latest Business Outlook Tracker* finds that a perfect storm of temporary and structural supply chain challenges, from changing Brexit regulations to production delays, are threatening to create a winter of discontent for UK businesses and consumers alike.

Over the last few months, the UK has been facing severe supply chain disruption resulting in delayed deliveries and increased prices. One in five of the 605 mid-sized businesses surveyed said they are finding it harder to move products around the UK and across the world because of the ongoing issues.

The research finds that there are a range of problems contributing to the disruption, but the main issues cited by respondents who said they have been negatively affected were found to be: Delays from source production facilities (23%), Changing rules and regulations from Brexit (21%) and International delays in shipping (21%).

While not ranked individually within the top issues, collectively, over half of respondents who said they have been negatively affected said problems relating to a lack of available workers was a major blocker. Including shortages in skilled (18%) and unskilled (19%) operators, and shortages in transport workers, including heavy/large goods vehicle drivers (19%), and specialist transport workers (18%).

Carl Williams, North West managing partner for Grant Thornton UK LLP, commented:

“As North West businesses try to recover from the ongoing impact of the pandemic, an amalgamation of problems, from skills shortages and Brexit related uncertainties, to temporary issues such as shipping and production delays, are causing a huge amount of disruption to supply chains.

“This really is creating the perfect storm for a challenging winter for the North West region and the UK as a whole, with the potential for things to get worse for businesses before they get better. Many businesses may not be aware that they are currently benefitting from a range of phased Brexit implementations measures, including grace periods around rules of origin. With this set to change from 2022, when further border measures come into force, businesses need to ensure that they are prepared and ready, to avoid a shock and even further disruption.”

Ongoing supply chain issues are also found to be impacting profit levels across the mid-market. Over one third (39%) cited that they are facing reduced profits due to the continued disruption. Profit expectations over the next six months across the mid-market have also dropped -18pp compared to Grant Thornton’s last Business Outlook Tracker survey in August.

As businesses continue to build their recovery from the pandemic, one quarter of businesses (26%) also cited supply chain disruption as a top threat to their growth in 2022.

Carl added: “While business confidence is clearly fragile, the North West continues to show great resilience and confidence with their approach. With a successful tech sector, strong links to universities and businesses and fast-growing companies across booming sectors, we should remain optimistic. Understandably though, businesses will be looking for reassurance that the issues disrupting their supply chains can be resolved, and swiftly. As we look ahead to the Autumn Statement next week, we need to see affirmative action from government to help businesses navigate through these challenges.”

This was posted in Bdaily's Members' News section by Edward Hawkins .