Shortages caused by coronavirus could be a dry run for a no-deal Brexit

We don’t know how bad the outbreak will get, says James Moore, but efforts to contain the spread of the virus are starting to have an impact on manufacturing and the supply of goods

Some ports are already reporting slowing activity due to Covid-19 (Getty)

The global supply chain is something few people not directly involved in it pay much attention to unless and until they have to. Like now. We don’t yet know how bad the Covid-19 outbreak will get and whether the dire worst-case scenario predictions – one in five British workers going off sick and suchlike – will be realised.

However, the aforementioned supply chain is one area where it is having a very real and quantifiable impact right now, largely as a result of efforts to halt or at least slow down the spread of the virus. China is the world’s workshop, accounting for just over 16 per cent of global GDP. For reference, its share during the Sars outbreak was 4.3 per cent. It has also more than doubled its share of world trade since then.

The impact of temporary factory closures, or slowdowns, in that country is going to have a corresponding impact on those companies that rely on them for parts and products. There are an awful lot of them. Apple has already signalled an impact on earnings. Others will have to make similar statements if they haven’t already. There will probably be a lot of them. Ain’t globalisation grand.

India has also grown significantly in importance since the Sars outbreak. Its position is worthy of note because of the role it plays in the supply of numerous commonly used medicines courtesy of the world’s biggest generic drug industry. You can start with paracetamol and move onwards and upwards from there. We’ve already seen Amazon struggling to cope with the profiteers using its marketplace and evidence of some shortages – tried to buy hand sanitiser recently?

But the latter is a domestically driven issue. It’s going to take some time for the supply chain problems caused by events in China to work their way through the system. What you can be sure of is that they are going to impact a much wider range of products than those people are buying in their droves to keep microbes at bay. A delay to your new iPhone you can, of course, deal with. Older models do everything most people need them to do. But it isn’t just iPhones.

I refer you back to the issue of drugs. India has restricted the export of 26 ingredients and the medicines made from them. When it comes to manufactured goods, Pierre Haren, a Fintech CEO, and David Simchi-Levi, a professor at MIT and the founder of a supply chain software company that’s now part of IBM, believe there will be a major, worldwide impact, the full force of which will start to be felt in two to three weeks (taking into account shipping times and the like).

Some ports are already reporting slowdowns in activity. Writing for the Harvard Business Review, the two men warn that problems could be felt for months. Plants all over the world will be forced to slow production, putting workers on short-time in the process. The economic impact will be considerable. There’s a reason for a sharp spike in Google searches featuring the phrase “global recession”.

For us here in Britain, all this bears careful attention as Boris Johnson’s artificially imposed deadline of 31 December to conclude a trade deal with the EU gets closer. This could yet be seen as a dry run for the disruption to the supply of imported consumer goods, drugs and materials required by UK manufacturers that the Tories’ cherished no-deal Brexit by the backdoor will cause.

Of course, the difference is that coronavirus is an unavoidable event; what insurers sometimes refer to as an “act of god” (albeit not for any religious reasons). No-deal Brexit, and the blockages at UK ports that will flow from it, is an entirely avoidable act of political stupidity. Covid-19 isn’t the only virus that’s active on these shores.