Britain’s biggest retailers and wholesalers have raised their stockpiling efforts to the highest levels since the 2008 financial crisis, according to a key industry report, with little more than 60 days to go before Brexit.
According to the latest snapshot from the Confederation of British Industry’s monthly distributive trades survey, retail businesses raised the ratio of their stocks to expected sales in January to the highest level since February 2008.
The report, which is closely monitored by the Bank of England for early warning signs from the UK economy, said retailers expected demand to fall and had built up stocks in case the UK exits the EU without a deal.
A growing number of companies have begun ramping up their plans for a potentially disruptive no-deal Brexit at the end of March, with Westminster still gridlocked since Theresa May suffered the biggest government defeat in history over her Brexit plan.
Firms including Bentley, the luxury carmaker, and retailers such as Dixons Carphone and Pets at Home have announced plans to shore up supplies in the event of chaos at British ports.
Rain Newton-Smith, chief economist at the CBI, said: “There are early signs of companies bracing themselves for a no-deal Brexit: some of our wholesalers are now reporting that they’re building up stocks in case the UK exits the EU without a deal.”
The CBI distributive trades survey, which has run since 1983, surveyed 103 retailers, wholesalers and motor traders between 27 December and 14 January. The companies represent a third of all employment in retailing.
Businesses said sales volumes had stabilised in January following a tough festive trading period. Sales at the start of 2019 were, however, below average for the time of year, in one of the worst periods since 2011.
Sales of clothing, footwear and leather items, hardware and DIY declined, although grocers and online sales reported higher sales volumes. The CBI said the outlook for the coming month was better, with retailers expecting sales volumes and orders to rise in the year to February.
Samuel Tombs, chief UK economist at the consultancy Pantheon Macroeconomics, said: “Retailers’ tills should be ringing loudly at present, given that real wage growth is picking up, while employment still is growing healthily.”
“But heightened uncertainty about Brexit – clearly evident in surveys of consumers’ confidence, which deteriorated sharply late last year – is encouraging more consumers to be cautious.”