Firms under strain as they tie up money in stockpiling materials, says Santander
British manufacturers are being forced to build up financial buffers in preparation for a no-deal Brexit as the cost of stockpiling goods and materials puts companies under strain.
Measures taken by manufacturers to prepare for a disorderly exit include creating cash cushions and taking out working capital loans to cover the costs of stockpiling.
Manufacturers have already spent millions storing raw materials and finished products in case a no-deal Brexit causes delays at the border, tying up money that would otherwise be used to run day-to-day operations. Airbus and Brompton Bicycle are among the UK-based manufacturers that have started stockpiling as 29 March looms.
Santander, one of the biggest lenders to business in the country, said its manufacturing clients were building up cash reserves and delaying capital expenditures as they sought to keep cash in the business. A source at another major high street bank said the lender was working with manufacturing clients on offering more working capital loans.
Paul Brooks, the head of manufacturing at Santander UK, said: “In recent months we have seen manufacturers choosing to build up cash reserves and delay investments due to uncertainty over the economy’s outlook.