If we look back over the past four years, as a country, we have been through the wringer and it all started on 23rd June 2016 with the Vote to leave the EU. It seems like a lifetime ago, but it was a date that waged a three and a half year battle between the ‘remainers’ and the ‘Brexiteers’ and culminated in a landslide victory for Boris Johnson and the Conservative party on 12th December 2019.
By December 13th 2019, we thought we were on the last leg of an on-going battle and thoughts were now turning to how we could exit the EU successfully and with as little disruption to business as possible.
No sooner had negotiations started, Coronavirus struck the globe. The past 8 months have been unlike no other and both businesses and the Government have firmly had their heads and attention turned by Covid. But, we are still set to leave Europe in a matter of months, so we thought we would have a look at what deals are on the table, and what this might mean for UK manufacturing.
Deal or no Deal?
There is no escaping the fact that leaving the EU is going to have an effect on UK Businesses, regardless of their industry. At this moment in time, there is no trade deal with the EU in place with the main sticking points being fisheries and Brussels’ demand for a level-playing field on standards to prevent the UK undercutting continental competitors. Without a trade deal, the UK would be forced to fall back on World Trade Organisation terms which require tariffs on a wide range of goods both through import and export, including 10% on the price of a car.
A Trade deal with the US
Well if we thought we had had a tumultuous political minefield to tiptoe around in recent years, the US has had more than it’s fair share of dramas too. With Joe Biden’s feet now ready to be firmly planted under the desk in the Oval, what does this mean for the UK? Negotiations with America are currently in their fifth-round having begun in May. International trade secretary Liz Truss says that the UK is in a good position to move forwards with negotiations after the election. The US is already the UK’s largest trading partner outside of the EU and the trade we do with it is larger than with any single EU member state with exports totting up to almost $50billion a year. One industry sector who has a vested interest in the terms of a deal with the US is the automotive industry. Last year, 14% of all US exports were cars. An ambitious US trade deal has the potential to provide a significant offset to Brexit for UK Car manufacturers.
Terms agreed with Japan
The UK thrashed out a deal with Japan last month but it is hard to say exactly how far the U.K.-Japan Comprehensive Economic Partnership Agreement pushes beyond Japan’s deal with the EU at the moment. An important aspect for UK manufacturers will be the reduced tariffs for car and rail parts but there still remains the sticking point of British goods containing lots of Japanese parts that the U.K. wants to sell into the EU, which will need to be sorted out in a trade deal with the bloc.
Although there are deals that are being done, our main importer of British made goods remains the EU and this deal is going to be incredibly vital to all UK Businesses. Until we know exactly where Boris Johnson and the UK Government are going to lead us in these negotiations, businesses must gear up for every eventuality. Make UK have put together a step by step guide to leaving the UK for British manufacturers focusing on trade, employees and services.