The chair of Make UK has warned the Government that a no deal Brexit would be catastrophic for the manufacturing industry.
It was also warned that the prospect of applying zero tariffs on imported goods as a consequence would kill off some sectors of industry overnight.
The warning was given to the Chancellor of the Exchequer by Dame Judith Hackitt at the annual dinner of Make UK (formerly EEF), the manufacturers’ organisation. The dinner followed on from the Make UK National Manufacturing Conference.
It comes on the back of a major survey carried out for Make UK by YouGov which shows that 49% of companies believe leaving the EU with ‘no deal’ would make the UK a less attractive location for manufacturing. By contrast just over a quarter (28%) believe it would make the UK more attractive.
When analysed by business size, the difference is far starker amongst large businesses with almost three in five (58%) viewing the UK as unattractive in the event of no deal, compared with 48% of medium sized firms and 43% of small firms.
Furthermore, just 9% of companies say they have won business previously sourced overseas since the referendum, highlighting the fact leaving the EU does not appear to be improving prospects for companies.
In her speech, Dame Judith said: “I am saddened by the way that some of our politicians have put selfish political ideology ahead of the national interest and people’s livelihoods and left us facing the catastrophic prospect of leaving the EU next month with no deal.
“This is not a prospect that our sector can counter. As our survey published this morning with YouGov shows, companies have already taken action to move production overseas and the prospect of leaving with no deal means the UK will be a far less attractive location for manufacturing in the future.
“The clock has almost run down and it is now essential that the pantomime in Parliament ends and politicians of all persuasion come together to agree a deal that protects the future of manufacturing and people’s jobs right across the UK.
“Let me be clear for the press and for those hard brexiteers who accuse us of scaremongering. This is very real and very serious. The ninth largest manufacturing economy in the world needs to be assured that our contribution to UK prosperity is recognised and valued.”
The survey also shows that since the referendum in 2016 companies have already taken significant including offshoring production. Of those who have done so, almost two thirds (61%) have switched production elsewhere in the EU. By contrast just one fifth of companies (19%) have switched production back to the UK.
Furthermore, of those who have adjusted supply chains a third (35%) have offshored with the EU being the most common destination. A quarter (26%) have reshored production back to the UK, the vast majority of which has come back from the EU.
The survey also shows that adjusting their supply chain has been a costly exercise for companies with over half (51%) saying it has increased their costs with just 10% saying this has reduced their costs.
The financial impact of preparing for Brexit is also evident in the fact around half of companies have taken action to stockpile goods or, are considering doing so, with over half (56%) of those who have started stockpiling experiencing some financial difficulty in doing so.
Looking ahead to a post-Brexit economic environment 53% of companies believe a lower tax burden would help encourage manufacturing activity in the UK, followed by 52% of companies who say a Government commitment to keep energy costs at or below the EU average would do so.
The survey of 429 companies was carried out between 28 January and 5 February.
Make UK www.makeuk.org
