News | Published January 31 2020

Manufacturing groups urge government to retain close alignment with EU

Yesterday, manufacturing groups met with Michael Gove to ask for clarity over Britain’s future relationship with the European Union.

This follows news, announced yesterday, that Brexit uncertainty had caused the lowest rate of car production since 2010.

Ahead of Britain’s departure from the EU at 11pm today, manufacturers voiced their concerns about the post-Brexit business landscape.

Ian Wright, the chief executive of the Food and Drink Federation, said: “It’s clear that government are serious about engaging with industry.”

This follows Gove’s statement that the government is aiming for “as close as possible a relationship with the EU – and the approach we want to take is built on the relationship they [the EU] have with Canada.”

This was echoed by Boris Johnson who has repeatedly called for a “zero tariff, zero quota” trade deal to be agreed between the two parties.

This will need to be agreed by the end of December 2020, when the transition period ends.

Manufacturing groups declared their willingness to support government efforts to meet this deadline but admitted the timescale may be challenging.

Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, said: “I don’t know if it’s doable, but we’re up for it.

“We need to be up for it, we can’t afford to get to the end of this year and not have a trad deal. That would be a major threat to our future here in the UK.

“What we have now is exclusion from a whole range of checks on animal health, on customs, checks on lorry drivers and so on.

“Behind a ‘zero tariff, zero quota’ deal would be a whole load of new friction that would add cost, delay and difficulty in doing business.”

Key to the future of the manufacturing, and the UK economy as a whole, will be whether the UK will be able to diverge from EU regulation while retaining access to the single market.

Ursula von der Leyen, the President of the European Commission, said: “Without a level playing field on environment, labour, taxation and state aid, you cannot have the highest quality access to the world’s largest single market.”

Divergence could cause significant difficulty, and additional costs, for manufacturers in the UK. 

Nicole Sykes, who reports on EU negotiations on behalf of the Confederation of British Industry, said: “At the moment, businesses have one set of rules to follow, one set of tests, and one set of enforcers of the rules to deal with, when they trade with the EU.”

If manufacturers had to adhere to a new set of rules, Sykes predicted future difficulty. She said: “I spoke to one firm that said if they have to do a deal with the same kind of structure that Canada does, they are thinking about £1,500 on every machine they sell. That’s about 10 per cent of what they sell the machine for.”

Boris Johnson is expected to outline the government’s trade priorities next week. 

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Authored by

George Salmon
Political Editor
January 31 2020

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