Which manufacturing sectors in the UK are most vulnerable to Brexit?

27 Feb 2018

Any BFPA or BFPDA member company who has an interest in trade (particularly exporting) might like to know about the interesting and relevant work being done by the UK Trade Policy Observatory (UKTPO), which is a partnership between the University of Sussex and Chatham House, in relation to Brexit and its potential impact on UK manufacturing and future trade deals.

The UKTPO is an independent expert group that:

  1. Initiates, comments on and analyses trade policy proposals for the UK; and
  2. Trains British policy makers, negotiators and other interested parties through tailored training packages.

At a recent EURIS* meeting in London, Professor Alan Winters highlighted a very interesting paper (briefing paper 16), published in February 2018 called “Which Manufacturing Sectors are Most Vulnerable to Brexit?”

The paper looks at the possible effects of five Brexit Scenarios:

  1. EEA
  2. FTA with EU and FTA67
  3. FTA with EU
  4. No Deals
  5. FTA with FTA67 and ROW

The KEY POINTS from the paper are reproduced (with permission) below:

  • None of the five Brexit scenarios that we model leads to a positive outcome for UK manufacturing. Even if the UK were to remain a member of the European Economic Area (EEA), UK manufacturing industry risks shrinking as a result of the UK leaving the EU.
  • However, there is considerable variation across manufacturing sectors. While textiles, clothing and footwear production may have the largest decline, food processing sectors may see growth in domestic production.
  • Although post-Brexit trade barriers may lead to expansion in output in some manufacturing sectors, this will come at the expense of higher prices for consumers and for producers buying intermediate inputs.
  • High tech and medium-high tech manufacturing sectors are more at risk of a significant decline in domestic production than medium and medium-low tech sectors. This has important implications for the UK Government’s Industrial Strategy, which aims to support economic growth and drive productivity through Research and Development (R&D) and innovation.
  • Different policy scenarios have quite different impacts on different sectors and on different regions.
  • Signing new trade deals with other countries, no matter with whom or how many, will not fully compensate for the loss of trade with European partners if the UK leaves the EU with no deal.

The FTPO website is full of all sorts of useful information including a few great cartoons explaining the issues facing the UK with regard to trade post Brexit. It’s definitely worth a look. You can also download Briefing Paper 16 referred to above in full:

https://blogs.sussex.ac.uk/uktpo/

*EURIS is an advisory body for the potential impacts of the changing relationship between the UK and EU for the UK Government, manufacturers and media. EURIS members are industry trade associations covering some 3500 companies across electrotechncial, electronics, renewables and mechanical engineering products. It has a focus on product manufacturers covered by the Single Market and the supporting regulations and standards.

Sarah Gardner, BFPA
sarah@bfpa.co.uk

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