Companies in the manufacturing and hospitality industries were most likely to say they were stockpiling goods in December 2020, before a trade deal was agreed with the EU.
Data suggest this was in part influenced by Brexit, with the EU transition period ending on 31 December 2020. A trade deal between the UK and EU was not agreed until 24 December, so businesses may have stockpiled goods because of the uncertainty around the UK’s future trading relationship with the EU.
UK goods imports from the EU peaked previously in the weeks approaching Brexit deadlines in March and October 2019. This was driven in part by imports of machinery and transport equipment, often used by UK manufacturers as intermediate parts in production processes.
However, the coronavirus pandemic has had a significant impact on businesses’ stocks throughout 2020. During November and December, the second wave of cases in the UK and the discovery of a new variant led to multiple lockdowns across the country, as well as the temporary closure of ports in the English Channel.
UK imports spiked ahead of previous Brexit deadlines
The UK faced two similar Brexit deadlines in 2019, when the Article 50 withdrawal agreement was due to expire first in March, then in October following an extension.
Our data suggest that firms were stockpiling ahead of these deadlines, with the value of imports from the EU increasing by £1.7 billion in March and by £0.8 billion in October (before falling in subsequent months).
In November 2020, the value of imports from the EU also increased, by £1.7 billion.
EU imports peaked ahead of ‘Brexit deadlines’ in March and October 2019
Trade in goods imports (excluding non-monetary gold and other precious metals), November 2018 to November 2020
These import spikes are particularly significant in commodities such as machinery and transport equipment that include intermediate parts predominantly imported from the EU.
Trade in machinery and pharmaceuticals saw some of the largest spikes ahead of Brexit deadlines
Trade in goods imports (excluding non-monetary gold and other precious metals), worldwide, by commodity, November 2018 to November 2020
Imports of commodities that peaked ahead of previous Brexit deadlines also rose during late 2020, but trade data for December 2020, when the trade deal was agreed and the UK left the EU, are not available yet.
Our Business Impacts of Coronavirus Survey (BICS) provides experimental data on UK businesses’ stock levels and stockpiling during this time.
Stockpiling most common in manufacturing firms during December 2020
Businesses within the manufacturing industries were more likely than those in other industries to report that they were stockpiling materials or goods between 14 and 23 December 2020, according to BICS.
The chart below shows that across all industries, 6.4% of firms reported stockpiling. Businesses within the manufacturing industry were most likely to report stockpiling (18.6%), followed by the accommodation and food service activities industry (16.0%).
Businesses in the manufacturing industry more commonly reported stockpiling from EU suppliers, while those in the accommodation and food service activities sector were much more likely to report stockpiling from UK suppliers.
Businesses in the manufacturing industry were most likely to report stockpiling materials or goods
Stockpiling estimates, percentage of businesses currently trading, broken down by industry, weighted by count, UK, 14 December to 23 December 2020
Source: Office for National Statistics – Business Impacts of Coronavirus Survey
- Final weighted results, Wave 20 of the Office for National Statistics’ (ONS’s) Business Impact of Coronavirus (COVID-19) Survey (BICS).
- Industries with fewer than 1% of respondents reporting stockpiling removed from the chart.
- The estimates for the number of companies who are stockpiling was calculated using the residual from companies who responded “not stockpiling” or “not sure”. As a result, there is a small chance of double counting as “not sure” was not mutually exclusive on the survey but it is unlikely a company would have checked “not sure” and one of the yes response options.
Download this chart Businesses in the manufacturing industry were most likely to report stockpiling materials or goodsImage .csv .xls
Between 29 December 2020 and 10 January 2021, after a trade deal had been agreed with the EU, the percentage of businesses who said they were stockpiling remained similar to the previous period.
However, there was a large drop in the proportion of manufacturing firms who said they were stockpiling, suggesting companies in this industry had done so at least in part because of the approaching no-deal deadline.
This decrease was offset by rises in businesses reporting stockpiling in other industries, such as human health and social work. Healthcare businesses were asked by the government to stockpile a six-week supply of products ahead of Brexit, but the rapid increase in coronavirus cases during December 2020 could also have affected this rise.
Was stockpiling because of Brexit or the coronavirus?
It is difficult to disentangle the impacts of Brexit and COVID-19 on businesses’ stock levels.
For some companies, the two issues are linked. Between 14 and 23 December 2020, almost one-fifth of businesses that reported they were unsure how to prepare for the end of the transition period in BICS said this was because of COVID-19.
Similar to trade data, our Quarterly Stocks Survey (QSS) – measuring the value of stocks held by UK companies – highlights stockpiling as a pattern of behaviour ahead of previous Brexit deadlines. It shows a clear peak in business stocks in Quarter 1 (Jan to Mar) 2019 and another rise in Quarter 4 (Oct to Dec) 2019.
Analysis of comments submitted as part of the QSS shows that Brexit was a consideration for businesses during 2019, with the term appearing most frequently early in the year, ahead of the March deadline.
However, responses from the first three quarters of 2020 show that COVID-19 has far outweighed Brexit as a factor behind changes in stock levels since then.
Companies’ mentions of COVID-19 outstripped those of Brexit in 2020
Percentage of comments referring to Brexit or the coronavirus , UK, Quarter 4 (Oct to Dec) 2018 to Quarter 3 (July to Sept) 2020
Source: Office for National Statistics – Quarterly Stocks Survey
Download this chart Companies’ mentions of COVID-19 outstripped those of Brexit in 2020Image .csv .xls
We await official trade and stocks statistics up to the end of the EU transition period. Trade data covering December 2020, and QSS findings for Quarter 4 2020 will be published on 12 February 2021.
What is stockpiling and why does it matter?
Stockpiling is the act of acquiring and storing a large quantity of something. Businesses (or individuals) may decide to stockpile for a number of reasons, including anticipation of a sudden rise in demand or a disruption in supply.
In this article, we are referring to stockpiling by businesses, rather than households.
Stockpiling can help businesses weather periods of uncertainty and ensure that consumers get continued access to the products they need.
However, in some cases it can create pressure for companies – as space is needed to store the stock and it may be hard to predict when or for how much it can be sold – and suppliers whose delivery times may increase.
Measuring the data
Business Impacts of Coronavirus Survey
The Business Impact of Coronavirus (COVID-19) Survey (BICS) is voluntary and the results are experimental.
The results are based on responses from the voluntary, fortnightly BICS, which captures businesses' views on financial performance, workforce, prices, trade, and business resilience. The Wave 20 survey was live for the period 14 to 23 December 2020. For questions regarding the last two weeks, businesses were asked for their experience for the reference period 30 November to 13 December 2020. However, for questions regarding the last two weeks, businesses may respond from the point of completion of the questionnaire (14 December to 23 December 2020). The survey questions are available.
Weighted estimates for the BICS have now been developed for all variables that are collected at a UK level. A detailed description of the weighting methodology and its differences to unweighted estimates is available in Business Impact of Coronavirus (COVID-19) Survey (BICS): preliminary weighted results.