Around two fifths of respondents said that they were stockbuilding, down slightly from the January survey. The scale of stockbuilding varied by sector as well as the size of the business and the size, nature and source of the components, materials or goods.
Results from the January and March surveys suggested that manufacturers were most likely to be building inventories, with construction businesses least likely to be doing so. Wider agency intelligence suggests that contacts have been building inventories of up to three-times normal levels.
The March survey suggested that as companies have increased contingency planning for a ‘no deal, no transition’ Brexit, their reported readiness for this scenario has also increased.
The March survey showed that around 80% of companies judged themselves ‘ready’ for a ‘no deal, no transition’ Brexit scenario, compared with around 50% of companies in the January survey.
Nevertheless, many companies reported that there were limits to the degree of readiness that was feasible in the face of the range of possible outcomes in that scenario. These included issues relating to tariffs, border frictions, exchange rate movements and recognition of certifications — which many companies felt were outside their control.
Indeed, the March survey also showed that respondents — even those that felt ‘ready’ — still expected output, employment and investment over the next 12 months to be significantly weaker under a ‘no deal, no transition’ Brexit than under a ‘deal’ scenario.
On average, companies expected output and employment to fall, though to a lesser extent in March than in the January and December surveys (Chart C (i)). Investment in the UK was expected to fall more sharply in the March survey than in the previous surveys. The differences between the survey results may be partly due to sampling issues.