Saturday 21 October 2017

Hard Brexit 'could cost UK manufacturing sector £17bn a year in exports'

The impact of Brexit on UK exports to the EU in key sectors could have a knock-on effect for Irish-based suppliers. Stock image
The impact of Brexit on UK exports to the EU in key sectors could have a knock-on effect for Irish-based suppliers. Stock image

Colm Kelpie Brexit Correspondent

The UK's manufacturing sector could lose £17bn a year in lost EU export revenues under a hard Brexit, a report by global law firm Baker McKenzie has warned.

The study said car manufacturers, as well as the technology, consumer goods and healthcare sectors could be particularly badly hit.

Those four sectors account for 42pc of the UK's manufacturing GDP and 45pc of manufactured exports to the European Union.

"These figures indicate the extent to which the UK's key manufacturing sectors are likely to be hit by the impact of a hard Brexit," said Jenny Revis, Baker McKenzie trade partner.

"You can understand now why there is mounting pressure for the UK to negotiate new customs arrangements for post-Brexit trade with the EU and for companies to work with their industry groups to help shape future trading relations with the EU."

The report - produced in conjunction with economic consultancy Oxford Economics - forecasts the extent to which increases in costs to UK exports could lead to EU consumers switching to a domestically -roduced alternative, or to a different exporting country.

The report states that the automotive, consumer technology and healthcare sectors could be hit with tariff and non-tariff barrier rates as a result of the imposition of a customs border between the UK and the rest of the EU.

"The UK Government has always been against barriers to trade, including non-tariff barriers," said Baker McKenzie trade partner Ross Denton.

"Some would say that the whole raison d'etre for Brexit is to remove obsessive standard-setting, categorisation and licensing of products from the UK but this certainly won't be the case if we see a hard border between the EU and UK. Companies need to begin quantifying the non-tariff costs so there are no hidden surprises."

The report shows that for the four sectors, the EU accounts for 49pc of UK exports while the UK accounts for just 9pc of exports from the EU.

"This demonstrates that the UK is highly dependent on the EU and, as a result, the proportionate decline in UK exports will be four times the decline in EU exports in these sectors - even before taking into account increased trade within the EU-27," the report noted.

Any dent to areas of the UK economy could have a knock-on effect in Ireland given the close supply chain links between the two countries.

Irish Independent

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