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Which manufacturing sectors are most vulnerable to Brexit?

12 February 2018

Trade experts warn, in a new report, that the UK’s high-tech and medium-high-tech industries are most at risk of slower production after Brexit.

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The report is the most detailed independent analysis yet of the potential Brexit impact on UK manufacturing. It models five Brexit scenarios, from a ‘soft’ to a ‘hard’ exit, across 122 manufacturing sectors. 

It claims that high-tech industries could see production decline by anything between 3.5-10.6 percent and medium-high-tech industries at 13.1 percent, depending on the type of deal agreed. A no-trade-deal Brexit would see manufacturing output drop by an average of 5.5 percent and industry prices increase by 5 percent. 

None of the five scenarios see UK manufacturing in a positive light. 

The researchers, from the UK Trade Policy Observatory (UKTPO) at the University of Sussex, say that even signing a Free Trade Agreement with every other country in world would not make up for leaving the EU without a trade deal. 

Dr Ilona Serwicka, UKTPO Research Fellow in the Economics of Brexit at the University of Sussex, said: “Even membership of the European Economic Area would result in higher trade costs and reduced market access in comparison to that currently enjoyed by the UK as a full member of the EU.

“These higher costs will harm UK manufacturing.” 

Manufacturing exports are also facing a decline of between 5-20 percent. Most vulnerable are the international sales of processed and preserved meat, which face a fall of 72 percent in exports if no deal is reached. Nine sectors face a decline in exports of 50 percent or more – all belong to the food processing industry. 

If the UK Government can secure a deal to stay in the Single Market, the outlook improves. Under this least-disruptive scenario, the analysis suggests that manufacturing exports would fall by a more modest five per cent, while production faces a 2 percent decline and prices would rise by 1.2 percent.

Dr Michael Gasiorek, UKTPO Fellow and Senior Lecturer in Economics at the University of Sussex, said: “This in-depth analysis confirms that Brexit is likely to have very different effects on different industries and sectors, and it is really important to understand these differences – for future policy and for the negotiations with the EU. 

“The type of Brexit we end up with really does matter.”

Professor Alasdair Smith commented: “While manufacturing is likely to take a hit whatever option is chosen, a soft Brexit deal for the UK could avoid catastrophe in favour of something far more manageable.”


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