As the Prime Minister hopes to cinch a EU deal next month, more and more businesses are demanding clarity on what Brexit will look like to allow them to plan for the scenario. Chair of the EEF group, Judith Hackett, has said that most businesses are underprepared, particularly small and medium sized companies (‘SMEs’).
This news comes on the back of the UK Trade Policy Observatory (‘UTPO’) publishing its report on Brexit, in which it considers five scenarios to determine which manufacturing industries would be worst hit by Brexit. It concluded that under all five scenarios, from soft to hard, the manufacturing industry would be negatively affected.
The manufacturing sector in the UK accounts for a total of 5% of businesses, 10% of employment, and 15% of turnover demonstrating that it is an important and profitable sector. Manufacturing accounts for 44% of the UK’s total exports meaning that it is one of the most affected sectors by the result of Brexit.
The UTPO compared five scenarios which ranged from a soft EEA scenario to a very hard Brexit where no trade agreement is reached and tariffs are applied to all goods. Under all scenarios the UTPO concluded that the manufacturing industry would be hit badly by Brexit. In a statement on Tuesday the head of a body representing the manufacturing industry will call for urgent clarity on whether there will be a transition period as manufacturers grow more and more nervous about the impact on Brexit on their businesses.
Similarly, the Environment, food and rural affairs committee (‘EFRA’) has warned of the potentially ‘significant’ impact of Brexit on the agricultural sector which it argues will impact consumers. EFRA argued that in order to offer consumers the best choice and most competitive prices the sector relies heavily on frictionless imports. As nearly two thirds of British foods come from the EU the British Retail Consortium (‘BRC’) argued that the impact on consumers ‘is clear’ suggesting that a tariff of 22% would drive up prices for the consumers dramatically resulting in a decrease in standards of living.
Hackett said in an interview ‘We must avoid new trade barriers, complex customs arrangements, or vastly different regulatory environments.’ As we can see, the impact of a soft Brexit will be hard enough for companies to ride out. Theresa May needs to ensure that businesses are protected in the negotiations; their success will be the thing which drives our economy offsetting any difficulties arising from leaving the EU.
Image: [The Conversation]