Industry warns against “clumsy” Brexit plan

A new report urges the Government to hold its nerve and avoid rushing through a ‘clumsy’ Brexit plan that could do lasting damage to UK manufacturing and the wider economy.

A report out today (21st September) from EEF, the manufacturers’ organisation and Squire Patton Boggs, the global law firm, spells out manufacturers’ key priorities for the forthcoming Brexit negotiations.

The report – Britain and the EU: manufacturing an orderly exit – draws on a number of recent EEF studies and points to new findings showing that just 5% of British adults think that loss or damage to the UK manufacturing sector is a price worth paying for leaving the EU.

While acknowledging that the Government faces a difficult balancing act between free trade and controlling the movement of workers, it warns against rushing through a ‘clumsy’ Brexit plan that could do lasting damage to UK manufacturing and the wider economy.

Instead, it is urging the Government to hold its nerve and deliver a carefully engineered Brexit that supports investment, ensures business certainty and allows manufacturers to play a full and unfettered role in helping the UK achieve post-EU economic and global trading success.

Key to this, the report claims, is for the UK to negotiate a bespoke deal – as opposed to agreeing to an existing off-the-shelf model (such as the Norway or Swiss models) – which specifically addresses the UK’s needs and recognises the ‘special relationship’ the UK has with the EU.  The report argues for a solution that enables manufacturers to continue to trade freely with the EU, without significant burden, while also pursuing ambitious international trade deals with countries outside the Union.

Over eight in ten manufacturers (84%) export to the EU, while almost three quarters of firms (74%) say that a 10% tariff on exports to the EU would have a negative impact on their business. This makes it critical that Brexit negotiations deliver ongoing unrestricted access to this key market.

While the referendum result indicated public concern over current rules on freedom of movement, the report says that the Government should seek an alternative that does not compromise the ability of businesses to hire easily, operate smoothly and deploy employees between countries. This is particularly important for manufacturing, which consistently struggles to find enough skilled workers.

For manufacturing, the big opportunity from Brexit is the future expansion of free trade outside of the EU. If harnessed, this could support jobs, growth and wealth generation in the UK. According to the report, just two in ten manufacturers (21%) are not interested in taking advantage and the sector’s horizon is broad, with the US, China, India and Canada, topping the trade wishlist.

The report urges the Government to support these trading ambitions and says that in doing so it is likely to find a natural cheerleader in the general public. Almost six in ten UK adults want to see post-Brexit Britain enjoying a better balanced economy (56%), exporting more (58%) and manufacturing more (57%).

Terry Scuoler, CEO of EEF, said: “Rushing through a clumsy Brexit is not in the interests of our sector or the wider UK economy. Manufacturers see great opportunity for jobs, growth and wealth generation from the expansion of global trade outside of the EU. At the same time, our report identifies concerns that our sector’s future success and ability to play its full part could be damaged if the UK fails to secure the right deal.”

“I would urge the Prime Minister to ensure that any new relationship works for our sector. This means maintaining unrestricted access to the single market and ensuring companies have the ability to hire and post employees across the EU – albeit with more controls in place.”

The full report can be downloaded here.