The Brexit effect: What’s the future for UK manufacturing?

When the UK left the EU on 31 January, the nation turned the page on a long awaited, much deliberated new chapter. And, despite the fact that over four years passed between the referendum and Brexit Day, until now, we’ve only been able to speculate on the true impact the decision will have.

British manufacturing has strong ties with the EU for many reasons. Nearly 50% of the import and export of UK manufactured goods go between EU¹ countries and employees from all over Europe help to fill key skills gaps in the UK. Some sectors, like transport and automotive, are highly integrated into EU-wide supply chains.

Throughout the manufacturing process of a product, goods often cross borders back and to between factories. They can travel between a number of EU countries before being finalised and could then go on sale within any of them. On 24 December, a provisional free-trade agreement was put in place that ensures the EU and UK can trade goods without tariffs or quotas.

It’s a positive move but even with this in place, a degree of disruption was expected and is certainly being felt at present. According to data from purchasing managers, in January, supplier delivery times for UK manufacturers were the longest in 30 years² as Covid-19 restrictions and Brexit interference stunted factory production.

In the face of these initial issues, a different relationship between the UK and the EU represents significant opportunity. Globally, Brexit will present new market opportunities for the UK, as well as a wealth of supply networks to tap into, with room to forge new relationships.

Manufacturing accounts for 50% of total exports

Manufacturing accounts for almost half of total exports, wages in the sector are around 15% higher than the national average, and 65% of private sector R&D investment is spent within the industry³. Moreover, many other subsectors’ success is strongly reliant on their links with manufacturing, such as machinery maintenance and logistics.

UK manufacturing is resilient and has a rich history. By prioritising relationships with suppliers, committing to adapting to new technology and investing in the right people, organisations within the sector can build on the opportunities Brexit presents and thrive – despite being outside of the EU.

¹https://ukandeu.ac.uk/brexit-and-uk-manufacturing/

²https://www.ft.com/content/2ed34037-af26-497c-9341-84fc635731a2

³https://www.sage.com/en-gb/blog/how-will-brexit-affect-manufacturing/