West Midlands mayor Andy Street is pushing ministers for a £1bn contingency fund to ease the threat of a cash-flow crisis for firms triggered by potential supply chain chaos next year.
Goods exports account for almost a quarter of the manufacturing-focused region’s output, and with Boris Johnson and the EU set to take a hard line in trade talks2020欧洲杯足球即时比分 starting next week, the risk of no deal when the transition period finishes at the end of 2020 has risen.
Mr Street, the Conservative mayor since 2017, has talked with ministers including new Business Secretary Alok Sharma over reviving support used in the financial crisis, including cheap loans or loan guarantees to help firms building up stockpiles to cope with disrupted “just in time” supply chains.
2020欧洲杯足球即时比分He said: “If there are short-term impacts from this, there will be cash flow implications, and it’s an appropriate conversation about – just as happened in 2008 – support for good businesses that have those cash flow consequences. If you are a medium-sized business in a supply chain for a company that’s running a just in time supply chain, you can’t do that so you end up having to increase your inventory substantially, and that has a substantial cash flow implication.”
2020欧洲杯足球即时比分Ministers are “understanding” of the potential problem and “determined that it doesn’t come to pass”, he added.
Businesses importing goods and components from the EU also face an extra 20pc in up-front cost as the Government plans to abandon the VAT deferral scheme that currently lets them delay payment, Make UK has warned.
The manufacturers’ lobby group said it will put severe strain on the cash flow of small firms, which will have to stump up extra funds at the border. They can reclaim the VAT once the finished products are sold, as they do with imports from non-EU countries, but it typically takes up to five months.
2020欧洲杯足球即时比分Under Theresa May, the Government planned to continue the deferral scheme post-Brexit. But under Mr Johnson the extra costs will kick in from next January.
“This impact would be felt at the same time as additional costs arising from the ending of the transitional period – such as customs processing costs, additional regulatory approvals and – potentially – tariffs,” the organisation said.
The West Midlands region includes the manufacturing centre of Jaguar Land Rover, which has repeatedly warned over the impact friction at the border may have on its operations.
The marque is also now braced for losses from the coronavirus, after car dealers in China reported an 80pc crash in sales
The Chinese market has become crucial for JLR, buying about 10,000 car per month. The outbreak is also dirsrupting the manufacturer’s supply chain. Chief executive Ralf Speth warned last month that it could be short of parts this week.