Image : Shutterstock . com .
The impact of Brexit
Brexit has created or exacerbated several of the challenges faced by British manufacturers , affecting issues such as EU imports , exports , investment and logistics / labour flows as manufacturers attempt to navigate new waters as a result of trade restrictions with Europe .
“ Brexit has been a drag on growth . It brought new red tape on commerce between Britain and its largest and closest market and removed a large pool of EU labour from the country on which many businesses had come to rely . The combination has exacerbated supply chain shortages , stoked inflation and hampered trade ,” commented news analyst , Bloomberg .
Research by the Centre for Business Prosperity at Aston University has shown that UK exports to the EU fell by an average of 22.9 % in the first 15 months after the introduction of the EU-UK Trade and Cooperation Agreement . According to the research , the UK has also experienced a significant contraction in the variety of goods being exported to the EU , with an estimated loss of 42 % of product varieties .
“ The uncertainty surrounding Brexit continues to impact UK manufacturers , particularly those who rely on exports to the European Union . With new trade agreements yet to be fully established , companies face increased costs and delays in getting their products to market ,” commented Catherine McKenna , an experienced financial advisor supporting energy-intensive companies with government tax relief .
Brexit has also negatively impacted labour markets as large tranches of the EU workforce returned home , as well as reducing the availability of much-needed skills from the departing workers . Its impact has also disproportionately hit smaller manufacturing businesses in Britain , who cannot afford to relocate production and staff to EU countries to
Sheet metal operations at BMW MINI factory in the UK .
Electric vehicle charging . Image : SMMT .
The uncertainty surrounding Brexit continues to impact UK manufacturers , particularly those who rely on exports to the European Union
continue to sell into EU countries . It has also negatively impacted supply chains , as manufacturers who regularly sourced products from the EU are finding with ‘ rules of origin ’ regulations , amongst others .
Recently , automotive OEMs ( such as Stellantis ) have raised serious concerns about how tariffs will affect electric vehicle manufacturing in the UK and have called for renegotiation of the terms of the Brexit trade deal .
The need for an Industrial Strategy
PWC pinpointed risks to confidence that have been highlighted by manufacturers , including geopolitical issues ; rising consumer and producer inflation ; energy cost uncertainty ; supply chain disruptions and increasing interest rates . However , the lack of a clear governmentsupported Industrial Strategy over the past few years has also hampered manufacturing in the UK . There is a clear case for a robust modern Industrial Strategy in the UK .
“ Ten years ago , Make UK ( then EEF ) set out its case for an industrial strategy . Since then , we have had six plans for growth but now find ourselves without one . There is broad agreement among stakeholders about what the UK needs for a successful industrial strategy . These can be broadly categorised into five themes , skills ; infrastructure ; finance ; innovation and the business environment ,” commented Make UK .
“ To these can now be added significant shifts in the policy landscape from the post Brexit and pandemic landscape , the transition to net zero , rapidly accelerating technologies spinning out from the fourth industrial revolution and the political imperative to spread growth more evenly across the UK ,” it added .
30 | ismr . net | ISMR June 2023