Supply chains stretch ahead of expected Brexit bureaucracy increase

Almost four in ten Irish companies report delays in their supply chain as a result of Brexit, while a substantial proportion have changed their export strategies in anticipation of an expected increase in Brexit red tape over the course of next year.

The UK’s departure from the EU is already having a substantial impact on Irish businesses, according to professional services firm Grant Thornton, raising concerns that deadlines will deteriorate further as a slew of new border requirements are brought in. introduced from October.

Some 37 percent of companies polled for Grant Thornton Ireland’s Global Business Report said they experienced longer delivery times in their supply chains, with 22 percent needing to recruit alternative global suppliers and 21 percent claiming to have recruited alternative suppliers in Ireland.

Almost a fifth – 17% – said they outsourced or recruited people to deal with the additional bureaucracy, and 51% identified the red tape and Brexit regulations as a constraint on their business growth.

“It is likely to get worse over the next 12 months, as the UK has used a slight touch so far,” said Jarlath O’Keefe, head of indirect taxes at Grant Thornton Ireland.

Prior notification requirements

From October 1, agricultural products and some other products imported into Britain will be subject to prior notification requirements, although the UK food industry has been pushing to reduce the proposed notice period from 24 hours to four hours. .

From January 1, 2022, exports will require safety and security declarations from the EU and the UK, creating a ‘double whammy’ duplication of bureaucracy on products, while from March 2022 , border controls will begin on live animals and certain plants and plant products.

“Irish businesses might need to have a customs officer in place at a UK port to make sure everything is running smoothly, and that will come at an additional cost,” Mr O’Keefe said.

The schedule for the new checks, which Westminster postponed earlier this year, could be pushed back again, he noted. In the meantime, the results of Grant Thornton’s survey suggest that many Irish companies are already taking steps to reduce their exposure to the heavier trade regime with Britain.

Although a third of businesses say the UK remains the key territory for targeted business growth, Germany was identified as the key territory by 17% of businesses and 16% of businesses named the US as the main market for potential export growth.

UK “overdependence”

Mr O’Keefe said the “past over-reliance” on the UK was “no longer a reality” for two-thirds of Irish companies, with some companies also exploring growth opportunities in China and France.

“Companies are looking to expand into other markets because they recognize that the UK cannot continue this lightness indefinitely,” he said.

Other non-EU markets – such as the US, where individual states apply different rules – “pose their own challenge”.

Senior executives from some 63 Irish companies were interviewed for the report, which is part of Grant Thornton’s research with 5,000 midsize companies in 29 economies, conducted in the first half of 2021.

Despite the ramifications of Brexit and the business difficulties exacerbated by the Covid-19 pandemic, three quarters of Irish businesses have expressed optimism for the next 12 months.

“Businesses remain optimistic about the future, but it is clear that Brexit and the pandemic will impact trade and growth going forward,” said Janette Maxwell, associate director of tax at Grant Thornton Ireland.

“International sales provide an opportunity to mitigate the financial impact of these global events and, as the world opens up again, companies will continue to look abroad to expand their operations, either by increasing their exports or by looking for more efficient suppliers. “

UK companies, meanwhile, are increasingly setting up EU depots to bypass Brexit requirements, as they also struggle to overcome domestic supply chain issues caused by a severe shortage of drivers. truck.

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