It is now nearly three years since the EU referendum of 2016 when the British electorate voted to leave the EU. Although the official withdrawal process was not triggered until the end of March 2017, the country was still expected to have formally left by the 29th March 2019.
Three years on, and we now find ourselves in the position of the withdrawal being extended, flexible, until 31st October. It seems that no one can agree on the terms by which the UK should leave and any future trading relationships with the EU. Even a recent series of indicative votes in parliament was unable to unearth a clear consensus on how to move forward. So, as parliament continues to discuss, debate and negotiate, what do the extensions mean for the UK economy, and in particular the British manufacturing sector?
Why is manufacturing important to the UK?
The manufacturing sector in the UK is of vital importance to our economy and to our levels of employment. According to the New Statesman, the sector accounts for a tenth of the country’s gross domestic product (GDP) and two-fifths of our exports. So, it’s important to the overall wealth of the nation that it can be sustained and continue to thrive post-Brexit.
What does the extension mean for British manufacturing?
In short, bad news. More uncertainty and stalled investments simply make this protracted process even more difficult for them to manage. Future planning will continue to be problematic as businesses try to consider the possible scenarios, which is likely to impact on future growth.
Of course, there are some subsectors which will fare better than others, depending on the proportion of goods exported. In the tech sector, for example, nearly three-fifths of goods are exported to the EU. While companies like http://www.ct1ltd.com/product-applications/metal-to-metal-adhesive/ who manufacture and supply a metal bonding adhesive and only trade in one or two EU countries may be less affected but are likely to still encounter some supply chain issues as we actually leave.
Many manufacturers are also increasing the inventory they hold to prepare for any disruption to the supply chain, and this has an impact on their cash flow position, making them less agile.
In short, the sooner a finite plan is agreed the better for the British manufacturing sector.