Thread by @NicoleSykes_

So you may have seen @CBItweets out today banging our well-weathered drum on no deal. And (having spent a proportion of my week going through 1678 bits of feedback from members on Brexit since the extension of Article 50 in April) here’s why (1/11)

The gap between the intrigue of politics and the reality in our economy is gaping. This is the kind of thing we hear from members every single day at @cbitweets (2/11)

So let’s remember what the threat of no deal is doing.
Impact 1. Investment – time and again, the story is capital expenditure on hold, little bits of productivity enhancing spend on IT happening. But a £5m expansion delayed here, a new UK factory build regretted there (3/11)

And investment has been tied to Impact 2. Contingency Plans.
Last week, we spoke to an engineering firm in the South that had spent £30million on contingency, a Bedfordshire household goods firm that had spent 0.5% of their anticipated 2019 annual revenue on it. Huge cost (4/11)

The risk of an October no deal means some are now spending even more. Because if you sell clothes, food, booze or toy, a pre-Christmas Brexit means much bigger stockpiles, much less warehouse space, and less time to get ready for it (5/11)

My rough back-of-the-envelope estimation?
70-80% of members say extension hasn’t changed their contingency plans. Most’ve paused ‘em, shelved ‘em, didn’t have ‘em, or are continuing to assume worst case scenario (6/11)

BUT keeping your stockpile is a crush on working capital, so some firms are running down their stock levels. That has impacts too eg. a paper mill told us it’ll mean making some temporary staffing reductions because they don’t need production at the level it was in Q1 (7/11)

GOOD NEWS THOUGH (and this is how it ties back to investment) if you wind down your stock, you’ve got more cash to play with, and a number of firms are reinvesting this in mini productivity projects. £20,000 here, £50,000 there. Not world-changing, but a positive (8/11)

The stockpiling ripple effect doesn’t end there. Because there’s Impact 3. Sales.
Stockpiling mean sales ⬇️ for some firms this quarter. The below is a common story. Racing to complete stockpiles for customers who are now using that stock means lower orders for producers (9/11)

And that’s just exacerbating previous damage. Service firms particularly report getting higher enquiries than last year, but fewer closes. Fewer big projects, European companies holding back, more delayed payments. 58% firms told us the Jan-Mar uncertainty impacted sales (10/11)

They're not pretty stories. It’s not where we want the country to be. And it’ll get a lot uglier if there’s no deal. So that’s part of why we wrote to all leadership candidates today (11/11)
Read the full letter here: cbi.org.uk/media-centre/a…