If Brexit had gone according to Theresa May’s plan, the UK would have exited from the EU and we would now have entered a transition period, with more negotiations over the specifics of the final agreement.
But three years since the referendum, the UK is still part of the EU. This will prolong the period of uncertainty until at least the end of October, and will have a negative impact on businesses across industries.
Our latest UK Powerhouse report highlights how some of the key sectors will be affected by Brexit.
New UK Powerhouse findings
The report finds that UK manufacturing production contracted on an annual basis for four consecutive months between October 2018 and January 2019. The industry has been suffering in the lead-up to Brexit, with uncertainty surrounding the future of trade agreements and regulation outside of the EU. While growth returned to positive territory in February, it’s unlikely that we’ll see a significant improvement in output with the period of Brexit uncertainty extended to October.
Automotive imports and exports
One manufacturing sub-sector set to be particularly affected by Brexit is automotive production.
According to the European Automobile Manufacturers’ Association, 51% of all exported UK-built cars were bought by customers in the EU in 2018. Furthermore, 80% of UK-imported automotive components came from the EU27 last year. This highlights the extent to which the UK is integrated in supply chains with the rest of the EU, which will be affected by changing trade policy post-Brexit.
The Centre for Economics & Business Research (Cebr) have analysed what’s in store for rest of the year. They expect to see an annual contraction in manufacturing sector output over the course of 2019.
They say that because a significant proportion of manufacturing goods are exported, trade relationships are important to the industry. Whilst UK trade with other countries will be affected by Brexit, protectionism between the EU and US while we remain in the EU is possible after the US proposed targeting a list of $11 billion (£8.3 billion) worth of EU products for tariffs. The products range from large aircraft to dairy products and wine.
Read the full version of our latest UK Powerhouse report.
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