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Have UK manufacturers already lost out because of Brexit?


It’s been another topsy-turvy few weeks in the business of Brexit as Labour reaffirmed its position and likelihood of rejecting pretty much any deal which Theresa May manages to bring back from Brussels.

But towards the back-end of this week, the rhetoric has become slightly more positive with the chances of a Brexit deal having ‘increased’ according to the European Commission.

Combine that with chief negotiator Jean-Claude Juncker confirming that a Canada+++ offer is well and truly on the table for Britain and things might appear to be heading in the right direction.

He noted that: “From the very beginning, the EU offer has been a Canada+++ deal. Much further-reaching on trade, internal security and foreign policy cooperation.

“This is a true measure of respect. And this offer remains in place.”

But his news conference was also barbed with accusations that confusion amid Britain’s own demands is holding up the process – and it’s that confusion which may have already proven costly for some manufacturers in the UK before a deal has been struck or an agreed deadline passed.

A report carried out by the University of Sussex surveyed 1,000 exporting manufacturers in the UK and found that one in three had already started to feel the negative impact of Brexit through loss of business or decreases in investment. Some reported a sales shortfall of up to 30%.

Many of those quizzed noted that they were preparing for a cut in investment in the short to medium term, whilst other firms also highlighted concerns surrounding a shortfall of skilled workers.

Professor Alan Winters, part of the University’s UK Trade Policy Observatory said of the results that: “Our research reveals that Brexit is already impacting British exports.

“In the event of a no-deal exit from the European Union, Britain’s trade with the EU will be badly hit, hundreds of thousands of jobs will be at risk and real wages are likely to be cut.”

Read more: Meet the sectors not overly concerned by Brexit

But its delays and the ultimatum of a ‘no deal’ which concerns UK manufacturers most of all. A report released alongside the study from Euris, a task-force of 13 UK trade associations monitoring and assessing the impact of Brexit, stated that: “Our industry needs clarity and a withdrawal agreement confirmed with the European Commission in the autumn.

“As this report and our member survey clearly show, further delays and the risk of no-deal will result in significant long-term damage to the UK manufacturing sector.

“Those UK manufacturers who are in supply or value chains with companies based in EU27 states will likely find that they lose contracts and are dropped from tender lists as their customers or corporate groups seek to preserve their ability to certify the end product as being of EU origin.”

Larger scope of business sectors more optimistic

Despite the doom, gloom and stark warnings of the University of Sussex’s report, across a wider range of UK business sectors, the outlook is a little more optimistic.

Further research carried out by Close Brothers Asset Finance found a number of sectors whose current outlook is that Brexit is more likely to have a limited impact on their business.

Indeed, whilst 32% of wholesale and distribution firms said they thought their business would suffer as a result of Brexit, 60% of those firms also said they thought their business would neither benefit OR suffer.

Recruitment companies reported that they expect to see a beneficial outcome from Brexit, potentially as any skills gap can inflate wage demands and as such agency fees.

Read more on that report here.

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