British manufacturing post-Brexit: Building new relations
The six-month old EU-UK Trade and Cooperation Agreement presents opportunities as well as risks for UK manufacturing. With the continued fallout from the pandemic and disruption to global supply chains ‘muddying the waters’, most commentators agree that it is far too early to assess the impact of Brexit on UK manufacturing, at least long-term, writes Nick Warburton
For a sector that contributes around 50% of the UK’s overall exports to the EU and is dependent on the trading bloc for imports, research published by IHS Markit reported a welcomed bounce back earlier this year.
The financial services firm’s analysis revealed that the Purchasing Managers’ Index (PMI) – used to measure economic trends in manufacturing – had jumped to a decade-high in March, the fastest monthly growth since February 2011.
However, as Fhaheen Khan, senior economist for the manufacturing sector’s lobby group Make UK, noted in The Guardian’s coverage, the improved output has largely been due to manufacturers stockpiling to shield against anticipated import price rises.
That’s one of the reasons why it is difficult to measure Brexit’s impact on UK manufacturing.
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Even for manufacturers that had meticulously planned, leaving the transition period in early 2021 was a challenge.
One of the biggest issues was the rules of origin and understanding how that was going to affect their trade into Europe
The Government’s decision to delay the introduction of full import controls from the EU until October – starting with goods Subject to Sanitary and Phytosanitary (SPS) Controls – means the ramifications of the new trade arrangements won’t be felt until next year at the earliest, not least because the full border model doesn’t come into force until 1 January 2022.
Even then, competing factors, not least the pandemic, may still cloud the picture.
What is clear is that from 1 January 2021, the TCA introduced a new set of country of origin rules and a new set of customs declaration requirements.
Fergus McReynolds, director of EU and International Affairs at Make UK, says that even for manufacturers that had meticulously planned, leaving the transition period in early 2021 was a challenge.
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JULY/AUGUST 2021
businessmag.co.uk
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