Hard Brexit could cost UK £17bn in lost export revenue
Car industry set to be worst hit of four key manufacturing sectors
Hard Brexit: trade barriers could cost the UK car industry £7.9 billion. Photograph: Christopher Furlong/Getty
A hard Brexit could cost the UK £17 billion, or €19 billion, in lost export revenue, a new report has warned. The research, by the law firm Baker McKenzie and economic consultancy Oxford Economics, suggests the car sector would be worst hit, with tariff and nontariff barriers costing it up to £7.9 billion, or €8.9 billion.
The report assesses the likely impact on trade in four key manufacturing sectors: consumer goods, automotive, technology and healthcare, which account for 42 per cent of the United Kingdom’s manufacturing gross domestic product and 45 per cent of manufactured exports to the European Union.
Consumer goods would be second-worst hit, with a projected loss of £5.2 billion, or €5.9 billion, followed by healthcare, at £2 billion, or €2.3 billion, and technology, at £1.7 billion, or €1.9 billion.
According to The Realities of Trade after Brexit, trade would fall off because the increased costs caused by trade barriers would lead to higher prices for UK exports and so make EU consumers switch to domestically produced goods. Although the European Union and the United Kingdom will both feel the pain, the UK is set to fare far worse, as the EU currently takes 49 per cent of UK exports while the UK takes just 9 per cent of the EU’s exports.
US and China offer biggest opportunities
The report suggests UK manufacturing exports to five key markets will need to increase by 60 per cent to offset export losses from a hard Brexit. It reveals that, for each of the four sectors, the United States offers the greatest opportunity, accounting for about half of the global market in each industry sector. China presents the second-largest opportunity.
“These figures indicate the extent to which the UK’s key manufacturing sectors are likely to be hit by the impact of a hard Brexit,” Jenny Revis of Baker McKenzie said. “You can understand why there is now mounting pressure for the UK to negotiate new customs arrangements for post-Brexit trade with the EU and for companies to work with their industry groups to help shape future trading relations with the EU.”
Separately, a report by the recruitment site Indeed has suggested that the number of UK-based professionals looking for finance jobs in Ireland has risen beyond the initial surge after the Brexit referendum, in June 2016. The company also said that interest in Ireland from European countries excluding the UK has accelerated, suggesting that London’s lure as Europe’s traditional financial hub could be diminishing.
Analysis of the 18 million monthly visitors to Indeed’s UK site showed a 39 per cent increase in searches for finance-related roles in Ireland from UK residents in the three months to the end of August 2017, compared with the three months in before the Brexit vote. This is an increase on the 37 per cent jump observed in the three months immediately after the vote.