What no deal means for Christmas

Boris Johnson is determined to take the UK out of the EU on October 31 “come what may”. But his pledge to meet this deadline, even if it means a no-deal Brexit, increasingly comes up against one practical problem.

Britain’s large companies did their best to respond when the government asked them to prepare for a possible no-deal Brexit on March 29. But many companies are going to find it much harder to prepare for no deal on October 31.

The biggest problem involves warehouse space. The government needs major retailers to stockpile lots of goods to mitigate against certain disruption across the Dover-Calais strait if no deal happens.

But while warehousing goods was just about manageable in March, it is much more difficult in October.

This is because October is when companies are already warehousing huge piles of goods for the Christmas shopping season, the Black Friday sales and potential weather disruption. There is therefore no space left to stockpile for a no-deal Brexit as well.

Two sets of stories in the past 24 hours underscore just how big a problem this is.

First, Ben Chu of BBC Newsnight has reported figures showing how dire the situation in UK warehouses has become.

He reports that the estimated vacancy rate for warehouses of over 100,000 square feet nationwide in the second quarter is 6.8 per cent. In the “inner M25” area the vacancy rate has fallen to just 2.2 per cent.

By contrast, in 2009, the national vacancy rate in warehouses was 23 per cent. According to the United Kingdom Warehousing Association: “There is no available space.”

Second, Britain’s retailers have started to speak up about how tricky the October 31 deadline will be.

Mike Coupe, chief executive of Sainsbury’s, says the October 31 deadline is “not far off the worst day possible” for retailers. As a result, he says, supplies of toys and electronics for Christmas could be hit.

“Our warehouses start to get pretty crammed during the course of October as we are stockpiling to be able to cope with the Christmas season,” Mr Coupe said. “There are generally very, very few places you can go.” 

Dave Lewis, Tesco’s boss, has made a similar warning. He said the supermarket chain had bought extra stock of long-life items in preparation for March 29. But he said it would be harder to make similar preparations this time round.

None of this is likely to bother Mr Johnson and his rival Jeremy Hunt. They continue to talk about achieving Brexit on October 31 as though it were some supreme national obligation — and something that can somehow be coped with as long as the British people make a great national effort.

The evidence suggests otherwise. No deal on October 31 could mean no toys at Christmas. This is not going to be an easy message to sell to the British people.

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Further reading

EU picks divided on how to handle Brexit

“Ms [Ursula] von der Leyen has criticised the lies of Brexiters in the campaign, describing Brexit as a ‘burst bubble of hollow promises’. ‘People are starting to realise, after the Brexit vote and the election in the US, what it means to believe the promises of populists’, she said in an interview with Der Spiegel. ‘Now reality is taking its toll, and it shows how many castles in the air have been painted and that the too-simple answers of the complex reality cannot stand’.” (Jim Brunsden and Alex Barker, FT)

Boris Johnson’s cash splurge is totally reckless. Yet it could win an election

“The area that has given me most pause over the past few days is the one that many of my colleagues have greeted with the greatest derision: Johnson’s outlining of his economic plans. I see their absurdity, yet they do not make me laugh. Are they ridiculous? No doubt. Reckless? Of course. But could they help him secure power and forever alter Britain? Sadly, I believe they could.” (Aditya Chakrabortty, The Guardian)

Will Brexit break the two-party system?

“The extraordinary surge of the Liberal Democrats and the Greens in the local and European elections — the latter case almost as surprising and noteworthy as the former — has burst apart my own, perhaps lazy, assumption: that pro-European Labour voters have nowhere else to go.” (Glen O’Hara, The UK in a Changing Europe)

Hard numbers

Gilts rally sharply and rate cut odds jump after Mark Carney acknowledges that mounting global uncertainty might prompt policy action from central banks in “some jurisdictions”.