• The COVID-19 pandemic has greatly reduced cash reserves at many UK firms
  • Few UK supply chain managers are ready for a no-deal Brexit
  • Abbott is a controversial choice as trade adviser

Many British companies have failed to prepare for the U.K.’s departure from the European Union due to the COVID-19 pandemic greatly reducing their cash reserves.

The Chartered Institute of Procurement and Supply, or CIPS, a global professional body, warned that as a result these companies cannot stockpile goods and are not willing to spend on Brexit-related expenses.

These cash flow problems could lead to product shortages in Britain as well as lower traffic in retail shops by the end of the year.

“[Prime Minister Boris] Johnson and [Cabinet Office Minister Michael] Gove have to persuade people that [Brexit is] really going to happen this time,” John Glen, an economist at CIPS, told Bloomberg. “Companies have got the double whammy of COVID-19, while also stocking up for Christmas and potentially for Brexit.”

Descartes Systems Group Inc., a company that sells logistics software, found in a survey of more than 500 U.K. supply chain managers that less than a fourth of them are prepared to cope with the extra administrative costs of Brexit, while only 18% are ready for a no-deal Brexit.

“Membership of the EU has masked the complexities of customs for many, many businesses,” said Pol Sweeney, vice president of sales and business manager for the U.K. at Descartes. “[Companies need] to act now to ensure the right systems, processes and skills are in place.”

Meanwhile, Britain and the EU have made no progress in talks designed to specify their new relationship for a post-Brexit world.

In the event London and Brussels fail to reach a new accord before the end of this year, the U.K. and Europe will be forced to adopt World Trade Organization terms on trade, which would involve various tariffs and quotas.

Separately, Johnson has also named former Australian Prime Minister Tony Abbott as his post-Brexit trade adviser.

Abbott, who was Australia's prime minister from 2013 to 2015, will join the U.K. Board of Trade, presumably to help Johnson in securing free-trade agreements with Australia, U.S. and Japan.

But Abbott is a controversial choice as he has been accused of misogyny and denying climate change.

Labour Shadow Trade Secretary Emily Thornberry said the appointment of Abbott was "absolutely staggering."

"I am disgusted that Boris Johnson thinks this offensive, leering, cantankerous, climate change-denying, Trump-worshipping misogynist is the right person to represent our country overseas," Thornberry told Politico.

Thornberry added: "This is someone with no hands-on experience of negotiating trade agreements, who denies the climate change that we believe should be at the heart of our trade policy, and who clearly has no concept of the importance of Britain's trade with the EU.”

The London-born Abbott is considered popular with British Conservatives.