Brexit 'good for business' - with caveats

Coinciding with the triggering of Article 50, new surveys show a marked increase in the number of manufacturing and engineering companies that believe Brexit will be good for business and industry - but point to troubles ahead.

In a survey carried out by Subcon 2017, when asked if they think their company will have a stronger future once Britain exits the EU, 40% of the 269 businesses polled answered yes compared to 14 per cent 11 months ago. The level of uncertainty has doubled, however, with 14% of businesses unsure what impact leaving the EU will have compared to 7% in 2016.

The survey also asked if businesses think UK manufacturing and engineering – as a whole – will have a stronger future once Britain is no longer part of the EU. 45% answered yes, compared to 30% last year – an increase of 50%.

A new question for 2017 asked if business and industry will suffer if Brexit impacts free movement of labour and responses were split down the middle: 46 per cent believe it will have an impact; 47% believe it will make no difference.

However, research by the Engineering and Machinery Alliance (EAMA) points to difficulties ahead. It says two-thirds of mechanical and electronic engineering companies expect trade barriers and cross frontier admin to cause problems post Brexit.

If the extra admin associated with exporting to the rest of the world applies to the UK’s, EU exports companies say that will increase their costs by between 3% and 10%.

Other findings, beyond the immediate hurdles that make international trade more difficult include, the imbalance between EU imports and exports, the role of standards in frictionless trade, companies’ positive but realistic views when considering their future business development opportunities and the powerful impact of specialist exporters and importers.

It’s the uncertainty that could potentially be so damaging over the next few years. Businesses can’t effectively plan for the future in some areas, for example if they don’t even know if they will be able to retain employees currently working for them from other EU member states.

Martin Walder, chairman EAMA, commented: “On the other hand there are some clear and obvious unvarying ‘immutables’. Brexit doesn’t change geography. The UK will remain immediately adjacent to the world’s biggest single market. In the natural order of commerce, UK-based companies will want to sell into that market and many companies are already used to meeting overseas customers’ standards in various markets including the US as well as the EU.

“It will be up to companies, organisations and trade bodies to ensure they remain up-to-speed with any future changes in standards, ensuring there’s no unintended creeping divergence between their standards and those of their EU customers. Digital platforms will help manage the required precision and flexibility.”

Gordon Kirk, Event Director, Subcon, commented: “It’s encouraging to hear that industry is feeling confident and positive about the future and our poll certainly supports that in relation to Brexit.

“It’s interesting to see the significant sway in opinion since we last polled businesses 11 months ago, especially as the UK is still at least two years away from breaking away completely from the European Union. The complex process of negotiating new trade agreements has not begun and the full impact of Brexit is yet to be felt, so it will be very interesting to see whether confidence continues to grow at the same rate over the next 12 months.”

www.subconshow.co.uk

www.eama.info