British aerospace suppliers have found themselves frozen out of industry tenders, as the uncertainty about Britain’s departure from the EU continues.

Brexit may have been delayed until the end of October, but as Britain begins the hunt for a new prime minister following the resignation of Theresa May last month, there are questions about whether there will even be enough time to negotiate a new deal with Europe. There are only a handful of weeks available for parliamentary debates and negotiation before the Oct. 31 deadline.

Concern about the possibility of a “no-deal” Brexit, a nightmare scenario for aerospace, prompted companies to shell out hundreds of millions of pounds on buffer stocks and contingency plans to maintain supply continuity to customers in the run-up to the original Brexit deadline of March 29.

A significant portion of those costs were unrecoverable, but more concerning is that UK-based suppliers have been prevented from participating in several tenders run by European and U.S. customers. Those suppliers “did not know the commercial terms on which they were going to be operating post-March 29 and April 12,” says Jeegar Kakkad, chief economist and director of policy at ADS, the UK aerospace, defense, security and space trade association.

ADS has not quantified the impact on the suppliers or the number of tenders UK firms have been closed out of, stating that the issues are anecdotal. However, it is known that UK companies were prevented from bidding on EU Galileo satellite navigation system contracts because of the UK’s envisaged status as a so-called “third country” outside the EU.

“Companies are not losing existing orders, but they are not replacing them with future ones because of the Brexit uncertainty,” Kakkad told journalists on June 11.

Investments in aerospace research and development have also taken a hit from Brexit, falling by around 20% since the June 2016 referendum passed, ADS says.

Fears of exiting the EU without a deal are not going away.

Several of 10 parliamentarians campaigning to replace May as prime minister are hard-line Brexit supporters, willing to see the country leave without a deal despite the protestations of economists about the disruption that would bring. Among the front-runners in the contest is a former foreign secretary, Boris Johnson, who reportedly responded to Airbus’ concerns last year about a “hard” Brexit by saying “f--- business.”

In a no-deal Brexit, the UK would exit the EU single market and customs union and revert to full trading independence under World Trade Organization rules. This will result in increased customs checks at British ports, potentially delaying the time-critical production outputs of aerospace manufacturers. It could also invalidate approvals, personal licenses and certifications issued by the UK Civil Aviation Authority and UK-approved organizations. Concerns about such a harsh exit prompted aeroengine manufacturer Rolls-Royce to transfer design approvals for its family of large aeroengines from the UK to Germany.

Brexit protestors

“No-deal is the worst possible outcome,” says Paul Everitt, ADS chief executive. “The potential of other free-trade agreements does not provide us with anything to cover the cost impact that we would suffer from being outside the EU.” He also points out that no major economy will do a trade deal with the UK “until they know our relationship with the EU, because it is a fundamental part of the attractiveness of investing in the UK.”

May had agreed to a Withdrawal Agreement with the EU, a steppingstone toward establishing a meaningful trade relationship with the union. But she thrice failed to get the document through Parliament. ADS members had backed the bid “not because it was fantastic, but because it provided the industry with stability,” says Everitt.

“What we fear is a slow, steady erosion of our competitiveness. . . . Consequently, we miss out on medium-term investment, so when the big investments come along, the UK is unable to compete,” he says.

ADS’ concern is that unless the threat of a no-deal Brexit goes away, suppliers may have to again begin building up stocks, taking further financial hits that could be unsustainable in the long term. “[Small and medium-size enterprises] don’t have the appetite and finances to do that,” says Kakkad. “This is tying up working capital, and they are in a holding pattern.” ADS has advised companies to speak to their banks to support future planning.

The government is trying to support the industry, establishing the Aerospace Sector Deal in December to provide financial help to companies investing in more environmentally conscious flight such as electric and hybrid-electric propulsion. ADS is lobbying for more support from government in a planned spending review expected at the end of this year.

“We call on politicians of all parties to seek pragmatic solutions that protect jobs and prosperity,” says Everitt.