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How Brexit may impact the UK manufacturing sector


As the UK government and European Union negotiators continue in their search for a mutually-agreeable trade agreement, businesses have to carry on preparing for the end of the transition period as best as possible. 

Whilst no future deal is guaranteed, what is almost certain is a change in the way the two parties do trade with each other. That change could be as small as some additional paperwork at points of entry, or it could be as large as a WTO tariffs structure and a new regime of regulations to digest, understand and comply with. 

A new report lead by Professor Anand Menon, Director of The UK in a Changing Europe, has looked in detail at the way in which the manufacturing sector may be impacted by Brexit – especially as this segment of the UK economy is probably more significant than some would give it credit for. 

The organisation, billed as an authoritative source for independent research on UK-EU relations, looked at a range of factors covering the UK’s manufacturing links with the EU, sectoral and regional exposure to Brexit and how the various potential Brexit outcomes may impact everything from tariffs and rules of origin to data protection and investment.

You can access their full report here.

Highlights from the report

  • Manufacturing accounts of 10% of the total UK economy and 9% of employment
  • The sector makes up almost half of the UK’s annual exports and 60% of private-sector investment into research and development
  • Any disruption to this sector could have a ‘sizeable negative impact on the wider UK economy’ due to the reliance of other sectors on manufacturing
  • UK manufacturers are deeply integrated with the EU single market, in particular with frictionless trade in order to maintain supply chains
  • Skilled EU manufacturing workers often support key skills gaps in the UK, such as in engineering
  • Sectors including aerospace may be more resilient to a no-deal scenario as they will likely face no tariffs with international trade in this sector being predominantly tariff-free
  • Brexit will create additional financial and other cost burdens for companies with tariffs, customs declarations, loss of collaboration apportioning and audits costing money and time resource
  • Brexit uncertainty has already resulted in delayed investment in UK manufacturing 

How the government could help

  • Loans, wage subsidies and government equity stakes in manufacturing businesses could help cushion the post-Brexit shock – similar to schemes already being utilised to support the economy during the coronavirus pandemic
  • Policies covering skills, research and development and financial support could be devolved to regions and devolved institutions to support the addressing of regional economic disparities – or ‘levelling up’. This would entail a policy reset moment. 
  • Region-specific industrial policies could be used to take advantage of new technologies that are part of the fourth industrial revolution

Is your business ready for Brexit?

The transition period for the UK fully leaving the EU behind is less than 6 months away. Government figures show 61% of companies are unprepared! Discussions with the EU are faltering and a no-deal crash out seems ever more likely. 

Read more: UK business leaders reiterate ‘hugely damaging’ prospects of no-deal Brexit

Now is the time to act. There’s a lot to do to be Brexit ready. Get ahead of the game by downloading our free Brexit Planning Checklist and seeing how prepared your business is right now.

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