• Tegan M

UK Manufacturing in a Post-Brexit World

There's no question that in a post Brexit world there are a lot of uncertainties, concerns about what agreements have been made between UK/EU and the double effect of Brexit and COVID-19 Pandemic. However, there are a number of positives to take from the withdrawal agreement.

This article explains the implications made to manufacturing businesses now the UK has left the European Union.

UK Manufacturing is highly important for the economy as it accounts for 45% of all exports. It also accounts for 65% of private sector R&D spending and manufacturing is responsible for 15-22% of the UK's GDP and employs around 20% of the UK's workforce.

UK Manufacturing is closely linked with the EU in a number of ways;

  • Almost half UK imports and exports of manufactured goods go to and come from the EU.

  • EU labour helps fill key skill-gaps in the UK.

  • Some sectors are highly integrated with EU-wide supply chains. (Automotive industry for example)

  • Intermediate goods often cross the boarders of EU countries (and the UK) multiple times as they go from factory to factory undergoing various processes before final assembly. Then to be sold to any EU country.

  • Some businesses need intermediate goods to be delivered 'just-in-time' to save on stockpile costs. They rely on daily deliveries to manufacture as needed. - Disruption of EU links could cause delays through customs, causing a negative effect on manufacturers in the UK.

Now being 4 months into a Post Brexit world, (After the December 31st transition period) manufacturers can better understand what the benefits and limitations their company faces trading with partners based in the EU.

Manufacturing has welcomed the trade deal as it has avoided tariffs and quotas, subject to complying with Rules of Origin. It is hoped that the deal now gives the go ahead to major investments in the UK that had previously been stalled amidst Brexit uncertainty.

However, this is still a thin deal with major implications and costs for UK manufacturing. Custom checks are likely to cause delays at UK/EU boarders adding to costs and disruption to tightly intertwined supply chains. Industries like aerospace, automotive and pharmaceutical will especially be affected, with the aerospace and automotive sectors still recovering from COVID-19.

Overall, UK manufacturing will welcome the deal, after all a thin deal really is better than no deal for the sector. Nevertheless, the UK will still need to consider an industrial policy that will support UK manufacturing and measure the impacts of Brexit on businesses.


Find out more about Orion as an automation company who integrate systems for businesses within a variety of sectors, including the manufacturing sector.

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