The British manufacturing industry along with its financial and banking sector is likely to bear the brunt of a hard Brexit strategy.
Today, British manufacturers have told Prime Minister Theresa May, it would be prudent to drop the threat of a hard Brexit during the Brexit negotiations. Without a trade deal, they would bear the full brunt of her hard decisions.
Earlier May had warned that during her negotiations with the EU, no deal will be better than a bad deal.
“The idea of being able to walk away empty-handed might be a negotiating tactic, but it would in reality deliver a risky and expensive blow,” said Terry Scuoler, chief executive of EEF, Britain’s manufacturing lobby.
He went on to add, “The rhetoric from the UK government needs to focus instead on achieving a deal that will work for the UK and the EU.”
May has prioritized immigration over other issues and has conceded that Britain will be willing to give up its membership to the EU’s single market bloc to achieve this objective.
In the absence of a trade deal, the trade between the EU and Britain will be subject to WTO rules and tariffs.
According to the EEF, Britain’s exports to the EU, including the export of chemicals, machinery and cars, could face a tariff upwards of 5.3%. Britain’s trade will also face additional hurdles of higher compliance costs and other forms of obstacles.
More than 50%, as measured by value, of British manufacturing is exported to the EU. More importantly, since many British factories depend on the EU for goods and parts, leaving the single market bloc could expose these manufacturers to increased trade risks.
To mitigate such issues, the EEF has called for close consultations with the government on its Brexit strategy. It has also underscored the fact the Britain needs to have a transitional period before it can enter into a new relationship with the EU.
As per Britain’s Brexit Minister, David Davis, Britain has yet to assess the economic impact of leaving the EU without a new trade deal.
The country’s manufacturing activity accounts for nearly 10% of its economy. Other than the manufacturing sector, Britain’s crown jewel, its banking and financial sector, is particularly worried about future access to EU’s single market.