Price rises in the UK ‘widely expected’ after Brexit

There is a broad expectation from suppliers, retailers and merchants operating in the home-improvement and construction industry that prices will rise following the UK’s departure from the EU, a new survey from MRA research has found.

More than 80% of retailers and merchants said they expected prices to increase next year as a result of Brexit, and the number of suppliers who expected prices to rise was almost as many.

Construction industry analyst MRA Research conducted the survey in March, using a mix of telephone interviews and online questionnaires, to assess industry views on how Brexit would affect the UK as a whole, their market and their own businesses

There were 89 respondents in total – a representative sample of merchants, including independents, and suppliers, including four suppliers from the bathroom sector.

In terms of sales, suppliers were more pessimistic than merchants on future revenue prospects.

One-in-four suppliers said they expected sales to drop off after Brexit, compared with 30% of merchants.

A third of suppliers said stock levels would increase, but almost half (46%) said they would stay the same.

“Some commented that stocks were increasing temporarily and were expecting to return to normal later in the year, depending on the outcome of the negotiations,” said MRA.

As for merchant comments on stockholding, MRA said: “The question about stock levels saw a wide spread of answers, with many commenting that stock levels will go up initially, or have already, because of an element of stockpiling, and that they expect stock levels to go back to normal eventually.

“A number of comments also mentioned that stock levels could fall due to initial difficulties with getting supplies from abroad or having to renegotiate agreements with suppliers, before returning to normal.”

The survey also found that more merchants (35%) than suppliers (around 20%) expected to import fewer products as a result of Brexit, suggesting contingency plans to switch to UK sourcing as a result of difficulties in the supply chain or the introduction of tariffs.

But suppliers were more likely than merchants to voice concern over increased rules and regulations once the UK leaves the EU. A third of suppliers said they anticipated having to deal with more red tape getting products from countries in the EU bloc into the UK. Only one fifth (20%) of merchants and stockists had the same view, while more than half of merchants didn’t think there would be any changes to rules and regulations after the UK’s departure.

In terms of how Brexit may affect the UK the construction market and the ramifications for their own businesses, respondents – like the country as a whole – were fairly even split on their expectations.

Most (47%) thought Brexit would be bad or very bad for the building industry as whole, while 45% said they were concerned for their own company.

Around one-in five (22%) said Brexit would be good or very good for the UK, with suppliers more confident than retailers.

More than a third (37%) of merchants interviewed thought Brexit wouldn’t make much difference to the UK as a country, but 33% thought it would be bad or very bad.

“Independents were slightly more optimistic than the national merchants,” said MRA. “None of the nationals thought Brexit would be very good for the UK, while 11% of independents thought this would be the case.

“A large number of respondents commented separately that the most likely outcome would be a slight dip in the short term, as a result of leaving, before seeing an improvement, or getting back to normal.”

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