Brexit could be ‘painful and costly’ for UK manufacturing

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Loss of access to the Single Market and the Customs Union would condemn UK manufacturing to a “painful and costly” Brexit, EEF has warned.

It said that any suggestion that ‘no deal is better than a bad deal’ is unacceptable, especially to an industry that account for 45% of all UK exports.

The stark warning comes in a briefing paper published on Monday.

It warned that should the UK walk away with no preferential access to the EU or international markets in place, on day one of Brexit, then it would immediately find itself at a loss, with the UK manufacturers bearing much of the brunt.

The sector would be particularly vulnerable because the UK is currently the 9th largest industrial nation in the world, it added.

The briefing paper also highlights 10 ways that manufacturers would be negatively impacted if the UK walks away without a deal (see below).

Terry Scuoler, chief executive of EEF, said: “The EU is our sector’s single biggest trading partner in a complex, tightly interwoven trading environment. Undermining the building blocks of this relationship – the Single Market and the Customs Union – without any other supportive structure in place would undoubtedly hurt our industry and condemn us to a painful and costly Brexit.”

The EEF has now called on the government to clarify its position on the Customs Union and Customs Arrangements. It also wants the government to engage in close consultation with the industry to set out the approach.

As well as prioritising WTO membership, the body asserts that when leaving the single market key trading conditions must be maintained to ensure certainty and minimise costs.

“Close consultation between government and industry is now vital if we are to successfully deliver a deal that supports trade and minimises costs and uncertainty,” Scuoler added. “Brexit will be the most complex unravelling that any UK government is ever likely to have to undertake and government will need the help of industry to identify, understand and mitigate the implications.”

10 ways that manufacturers would be negatively impacted if the UK walks away without a deal (Source: EEF)

1.Loss of zero rate tariffs

2.Reverting to higher WTO tariffs for exports

3.Potentially higher WTO tariffs on imports, including component parts from the EU

4.Any UK tariff reductions would have to be offered to the rest of the world

5.Changes to and potential loss of inwards processing relief

6.Changes to customs warehousing arrangements

7.New non-tariff barriers such as customs procedures

8.Having to meet non-preferential rules of origin for exports to the EU

9.Higher compliance costs for any EU standards that change

10.Loss of preferential arrangements with third countries under current EU FTAs.