New Make UK and Squire Patton Boggs research shows 64 per cent of manufacturers say Brexit delay and uncertainty has slashed profits in last two years
New research published by Make UK and global law firm Squire Patton Boggs has shown that 64 per cent of manufacturers have taken a financial hit during the last two years as they struggle to prepare for an unknown trading environment post-Brexit.
Businesses have already had to make a costly U-turn in the run up to March 29th, when stockpiling activities reached the highest level ever recorded in the G7.
Demand for warehouse activities rose by an unprecedented 32 per cent, which was followed by an inevitable slump, and since then almost half of companies have seen a noticeable negative change in EU customer and supplier appetite to do business with them due to continued uncertainty.
According to the survey, 76 per cent of manufacturers said that a no-deal Brexit would be disastrous to their businesses, with a negative impact on the appetite of both EU customers and suppliers to do business with them.
Some 60 per cent of manufacturers would increase product prices, and a third would cut staff.
The government’s proposed zero tariff plan in the event of a no-deal was also viewed negatively, with 73 per cent of companies saying it would bring about a cost hike for their businesses.
The scheme would see 87 per cent of imports by value eligible for zero tariff access to the UK, compared to the 80 per cent which are already tariff free.
Just three per cent of companies think they will see a saving from the new regime in the event of a no-deal Brexit.
As the default leaving date of October 31st looms, less than a third of manufacturers have prepared for the new customs processes which would come into force in the event of no-deal.
The survey further showed that while nearly two thirds of respondents understood that changes would be introduced to product labelling, fewer than half have taken any steps to enable them to comply with the new rules which will allow them to continue to trade with the EU.
Stephen Phipson, Chief Executive at Make UK, said: “This research must serve as a wake-up call to the government. Business needs clarity and stability going forward, but that does not mean leaving the EU at any cost.”
“No deal would leave manufacturing tariffs on the import of goods and just in time delivery logistics would become inoperable. Furthermore, businesses would be unable to access the people to ensure British companies can fill vacancies where they have skills gaps, or send workers to the EU for service contracts and other commercial opportunities.”
“We must also see a commitment to maintain mutually recognised, close regulatory alignment with the EU, supported by a system of arbitration and standard setting to ensure that British firms can produce goods that can easily be traded across Europe with clear protections in place.”
“We have already seen major companies voting with their feet and taking their planned business operations away from the UK while many businesses are losing out on new contracts with EU customers because of the uncertain future trading arrangements.”
“This is only going to get worse until a deal with a sensible transition period is agreed.”