What Effect Would A No-Deal Brexit Have On UK Manufacturers?

When the UK triggered Article 50 in March 2017, it essentially fired the starting gun on a 2-year period of negotiations to agree the terms of UK’s exit from the UK.

Since March 2017, it has already been a time of uncertainty which has seen job losses, the devaluing of the pound and international trade affected and at a time whereby ‘Brexit’ has been on every businesses lips as a scapegoat for its lack of growth or fortunes. It certainly is, an ambiguous time for manufacturers.

The ‘no-deal’ would mean the UK would trade independently whilst still being supported under the World Trade Organisation (WTO) agreements.

UK manufacturing accounts for 10% of the UK GDP and according to the ONS, over half of all manufactured exports by value went to the EU in the 12-month period up to April 2016. So the impact of Brexit on manufacturing is of the upmost importance to the UK economy.

What Will A No-Deal Mean For UK Manufacturers?

  1. A Restrictive Border: There would instantly need to be a physical border between the EU (including Ireland) and the UK and goods would no longer be able to pass freely. The UK would need to implement its own laws;
  2. Tariffs(taxes): The UK would no longer be exempt from surcharges. This would apply to EU goods coming into the UK and UK goods arriving at the EU border. Import VAT would be applicable. Export costs trading under the WTO rules would mean three times higher for the UK than the EU as a whole;
  3. Border Delays: Customs processes would take longer, in the form of paperwork (import and export declarations) and physical inspection of goods adding delays at ports;
  4. Red Tape: UK Manufacturers would need to prove the economic origin of their products through complex processes called ‘rules of origin’;
  5. Assessment Procedures: UK Manufacturers would face rules requiring them to prove their products met EU standards known as conformity assessment procedures. Any product placed on the market post-Brexit couldn’t use their existing UK test houses for approval without incurring extra costs to get them EU certified;
  6. Workforce: An agreement or phased implementation of net-migration needs to be considered. Currently the UK are able to access skilled workers from the EU and this would need to be addressed to enable free movement between the UK and EU;

What happens next?

The full extent of the result of the Brexit is still yet to be understood but there needs to be some contingency plans put in place by businesses in the UK. Such as:

  • Decisions about capital investment. Where do organisations base their core operations going forward;
  • Companies would need a clear insight in to its supply chains. The drop in the pound will make exports more competitive but may also drive up imports which will in turn increase output costs;
  • Complete visibility of hiring processes with the movement of foreign skilled labour;
  • Assessing their tariff exposure (identify tariff codes and tariff duties);
  • Registering for UK Economic Operator Registration and Identification (EORI) numbers in order to import and export;
  • Ensuring contracts and International Terms and Conditions of Service (INCOTERMS) reflect that they are now an importer/exporter;
  • Considering how to submit import and export declarations. Whether to pay a customs broker to do this for them, or how they can acquire the appropriate software to request the necessary authorisations from HMRC themselves).

The Future At Hobut Is Bright

At Hobut, be rest assured – as always, we will continue to invest in British engineering and British manufacturing regardless of the Brexit outcome.

We will keep expanding our markets, internationally and Globally and will endeavour to extend our product range with innovative designs and technologies with great quality and at competitive prices. We will continue to strive to be the best we can be.

With the recent addition of the Rogowski Meter Combo, the M850-LRC and M250-TRC which offers some amazing USPs, it underpins our positive outlook post-Brexit. Take a look at our product range and better still, give our sales team a call on +44 (0)1922 640003. They’d be happy to help.

Any questions or comments about this Blog then we’d like to hear from you. How do you see a no-deal Brexit impacting manufacturers?

You may also would like to take a look at some of our other articles:

A Way Forward For Britain With Brexit

Government Launches Strategy To Boost Industrial Productivity

The Future Of British Manufacturing