Manufacturers organisation the EEF delivered a warning to prime minister Theresa May that a ‘no deal’ stance over Brexit negotiations would have a disastrous effect on the sector and the wider economy.
In a forthright comment EEF chief executive officer Terry Scuoler said:
“The idea of being able to walk away empty-handed might be a negotiating tactic, but it would in reality deliver a risky and expensive blow.
“The rhetoric from the UK Government needs to focus instead on achieving a deal that will work for the UK and the EU.”
Being able to walk away empty-handed might be a negotiating tactic, but would deliver a risky and expensive blow
Terry Scuoler, CEO, EEF
The UK manufacturing industry currently accounts for 45% of all the country’s exports. Of those, more than half measured by value went to the European Union during the 2015/16 period.
“Unlike a typical free trade-type negotiation where walking away simply means the continuation of the status quo with neither party losing out, this is not the case between the EU and the UK, “the EEF document warned.
“Should the UK walk away with no preferential access to the EU or international markets in place, on day one of Brexit it would immediately find itself at a loss, with the UK’s manufacturing sector bearing much of the brunt.”
The impact would be felt by manufacturing business which are part of complex supply chains across the EU, while a no deal withdrawal could leave members facing an increase in tariffs of more than 5%, it claims.
Added Scuoler: “We must focus on developing a strategic approach that aims to preserve frictionless trade while building a launch-pad from which the UK can secure ever more ambitious deals from around the world.
“Obtaining fully-fledged WTO membership is key, alongside a clear and well-considered UK position on customs arrangements and a sensible transition period.”
*British businesses are confident yet underprepared for the effects of Brexit, claims a report by law firm Shakespeare Martineau.
While almost three quarters of British firms surveyed thought the UK was sufficiently strong to survive as an economy outside of the European Union, a majority said immigration restrictions were potentially damaging and unrealistic.
The study also highlighted a lack of readiness by firms for the effects of EU withdrawal. Almost two thirds said they had no specific ‘task force’ to deal with the changes. Family firms were the least prepared.
Shakespeare Martineau CEO Andy Martineau stated: “Those who take action now to prepare and plan for the whole host of potential variables can be ahead of the curve and capitalise on the current state of flux.”