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Most UK industrial goods suppliers want to keep EU regs

17 September, 2018

A clear majority (83%) of UK manufacturers of industrial products want to continue regulatory alignment with the European Union after the UK leaves the EU, according to a new survey by Euris, the umbrella group of 13 British trade associations representing suppliers of industrial products.

The 200 companies surveyed said that supply chains have already been disrupted by the post-referendum currency changes, and that companies in other EU countries have started to select non-UK suppliers. Although 36% report that they have not lost any sales due to Brexit, 15% says that they have lost exports already.

The findings of the survey have been published in a 28-page report, called Securing a competitive UK manufacturing industry post-Brexit. Among other things, it finds that:

•  79% of those surveyed believe that unpredictable border delays will add major or significant costs to their business, with 15% saying that even a two-hour delay at customs would impose additional costs;

•  40% say they will face a skills shortage without EU workers;

•  About a third say that have already seen a fall in investment due to Brexit, with only 2% reporting an increase; and

•  Just 4% have no worries about any element of Brexit impacting their business.

Together, the Euris trade bodies – which include Gambica, the Engineering and Machinery Alliance, the Manufacturing Technologies Association, Beama, the British Pump Manufacturers Association, the British Fluid Power Association, the British Compressed Air Society and the British Cables Association – represent companies with 1.1 million employees and a combined turnover of £148bn.

According to Euris, the EU will always be the UK’s biggest trading partner, regardless to the type of Brexit deal achieved. “It is not a choice of exporting to Europe or the rest of the world,” it adds. “If we become less competitive in the EU, we will be less competitive in other international markets.”

With the overwhelming majority of companies quizzed wanting the UK to continue aligning its regulations with those of the EU, Euris says that “there is no benefit in moving away from the EU regulatory system for industrial and manufactured products. In diverging, we would only isolate ourselves from other global markets.

Schneider Electric's Mike Hughes: strong regulatory alignment with the EU is "essential"

“In harmonising with EU product regulations,” it adds, “we are not giving up sovereignty, but ensuring a business-friendly Brexit which will not impose additional barriers to trade.”

Euris is particularly worried about the prospects of a “no-deal” Brexit which, it predicts, “would create immediate trade barriers for the UK and cause significant long-term damage to our markets”. The UK, it adds, would join Syria and East Timor at the bottom of global trading leagues, unlike the 164 World Trade Organisation member states, all of which have bilateral or multilateral free trade agreements, at least, with their nearest neighbours.

The report offers information and guidance on the dangers of a “no-deal” Brexit and the opportunities that a “business-friendly” deal would bring.

For 44% of the companies surveyed, imports account for more than half of their costs, while 52% say that more than half of their sales are intermediate inputs for other companies. According to Euris, any increase in barriers to trade will have a “significant” effect on the UK’s global competitiveness. “Our competitive advantage in non-EU markets depends on the UK having barrier-free trade for intermediary products and components with the EU,” it states.

Dr Howard Porter, the CEO of the UK’s electrotechnical trade body Beama, who chairs Euris, says that UK industry needs “clarity” and a withdrawal agreement confirmed with the European Commission in the autumn. “As this report and our member survey clearly show,” he says, “further delays and the risk of no-deal will result in significant long-term damage to the UK manufacturing sector and will put at risk the industrial product supply sector’s £148bn contribution to the UK economy.”

According the Mike Hughes, president of Schneider Electric for the UK and Ireland, the Euris report “highlights that the UK will always be closely tied to the EU as our primary trading partner. Our potential to develop trade links with non-EU countries is dependent on accepting this. As an industry, we believe it is essential that the UK maintains strong regulatory alignment for our sector with the EU, and continued membership and involvement in the creation of EU and International standards for the industry.”

The survey was conducted for Euris by the UK Trade Policy Observatory (UKTPO), a partnership between the University of Sussex and Chatham House. Its director, Professor Alan Winters, says that the report brings the challenges of Brexit to life. “This critical sector is already starting to hurt,” he adds, “and if its needs for frictionless trade with the European Union are ignored, a quarter of UK goods trade will be vulnerable to cuts. The threat to jobs is alarming.”




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