Record stockpiling at UK factories in Brexit build-up

Stockpiling in UK factories has increased at the fastest rate in almost 30 years as firms prepare for Brexit, according to a report.

The latest IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) revealed a sharp spike in purchasing and stockpiling at warehouses, with the index dropping to a three-month low of 52.8 in January, down on 54.2 in December and against the no-change reading of 50.

Commenting on the report in a statement, Rob Dobson, director at IHS Markit, said: “Stocks of inputs increased at the sharpest pace in the [survey’s] 27-year history, as buying activity was stepped up to mitigate against potential supply chain disruptions in coming months.

“There were also signs that inventories of finished goods were being bolstered to ensure warehouses are well stocked to meet ongoing contractual obligations.”

Duncan Brock, group director at CIPS, added: “Brexit blight strikes again with the weakest performance in manufacturing production since July 2016 and optimism withers away under the weight of uncertainty as the UK teeters on the edge of departure from the EU.

“Supply chains were closer to breaking point with stretched capacity and delivery times lengthening again for the 33rd month. This begs the question of how much longer suppliers can deliver and businesses can retain stocks for every eventuality.”

With just two months left until the UK is due to leave the EU, concerns are mounting over the uncertainty of companies’ futures. A recent study of 1,200 company directors by the Institute of Directors found that Nearly a third of British firms are considering moving their businesses abroad because of Brexit.

The UK is set to leave the EU on 29 March, 2019.