Supply chain risk up due to post-Brexit uncertainty

 
Natasha Clark
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Russia remains one of the countries on high risk (Source: CIPS)

Global supply chain risk grew for the fourth quarter in a row to its highest level since 2013 as a result of the Brexit vote, and increased trade restrictions around the world.

Analysis by the Chartered Institute of Procurement and Supply (CIPS) and Dun & Bradstreet economists showed a "disintegration of the political consensus over globalisation" with the World Trade Organisation (WTO) reporting an average of 22 new trade restrictions a month.

The trend is most evident in Western Europe, where risk rose from 2.60 to 2.63 in the latest quarter. This was put down to "uncertainty around the post-Brexit relationship between the UK and the European Union" which is having an effect on the pound.

Read more: A hard Brexit could undermine the very things driving GDP growth

The analysis said businesses should keep a "close watch on Brexit negotiations as tariffs are at risk of constant changes."

A brief stand-off between Tesco and Unilever looks to be only the first of many challenging negotiations for British procurement teams.

Over the next 12 months it expects this uncertainty to continue, aided by political ripple effects from the elections in France, Italy and Germany. It also says that European migration and the military situation in Syria could disrupt supply chains further.

Regardless of who wins the US election, both Hillary Clinton and Donald Trump have expressed concern with the Transatlantic Trade and Investment Partnership (TTIP) which could have effects for the rest of the world.

Read more: How OneSavings is addressing Brexit uncertainty

Bodhi Ganguli, lead economist at Dun & Bradstreet said: “Political and economic uncertainties continue to weigh on global business sentiment, and this unease about the state of the global economy is reflected in the decline of the CIPS Risk Index since Q4 2014." He added:

The CRI from late 2014 and into 2015 indicated the travails in emerging markets, and the continued failures of major developed economies to escape the slow-growth trap of the post-financial crisis era.

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