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February 21, 2019

UK no-deal Brexit “catastrophic” – Make UK

Britain’s manufacturers association chief has warned the UK government leaving the European Union (EU) with no deal post-Brexit would be catastrophic for the sector and the prospect of applying zero tariffs on imported goods as a consequence would kill off some sectors of industry overnight.

By Rhodri Morgan

Britain’s manufacturers association chief has warned the UK government leaving the European Union (EU) with no deal post-Brexit would be catastrophic for the sector and the prospect of applying zero tariffs on imported goods as a consequence would kill off some sectors of industry overnight.

The warning was given to the British Chancellor of the Exchequer by Make UK chairwoman, Dame Judith Hackitt at its annual manufacturing dinner.

The event follows on from the Make UK National Manufacturing Conference which will be marking the change of name from EEF after more than 120 years, to Make UK.

It comes on the back of a major survey carried out for Make UK by pollsters YouGov, which shows 49% of companies believe leaving the EU with no deal would mean the UK being a less attractive location for manufacturing. Some 28% believe it would render the UK more attractive.

“I am saddened by the way some of our politicians have put selfish political ideology ahead of the national interest and people’s livelihoods and left us facing the catastrophic prospect of leaving the EU next month with no deal,” said Hackitt.

“This is not a prospect our sector can counter. As our survey published with YouGov shows, companies have already taken action to move production overseas and the prospect of leaving with no deal means the UK will be a far less attractive location for manufacturing in the future.

“The clock has almost run down and it is now essential the pantomime in Parliament ends and politicians of all persuasion come together to agree a deal that protects the future of manufacturing and people’s jobs right across the UK.

“This is very real and very serious. The ninth largest manufacturing economy in the world needs to be assured our contribution to UK prosperity is recognised and valued.”

The survey also shows since the referendum in 2016, companies have already taken significant off-shoring production. Of those who have done so, almost two thirds (61%) have switched production elsewhere in the EU. By contrast one fifth of companies (19%) have switched production back to the UK.

Furthermore, of those who have adjusted supply chains a third (35%) have offshored with the EU being the most common destination. A quarter (26%) have re-shored production back to the UK, the vast majority of which has come back from the EU.

The survey also shows adjusting their supply chain has been an expensive exercise for companies with 51% saying it has increased their costs with 10% saying it had reduced expenditure.

The financial impact of preparing for Brexit is also evident in the fact around half of companies have taken action to stockpile goods or, are considering doing so, with 56% of those who have started stockpiling experiencing some financial difficulty in doing so.

Looking ahead to a post Brexit economic environment 53% of companies believe a lower tax burden would help encourage manufacturing activity in the UK, followed by 52% of companies who say a government commitment to keep energy costs at or below the EU average would do so.

Make UK, the manufacturers’ organisation, is the representative voice of UK manufacturing, with offices in London, Brussels, every English region and Wales.

It represents 20,000 companies, from start-ups to multinationals, across engineering, manufacturing, technology and the wider industrial sector. 

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