Brexit will add to rising costs facing British industry, UK manufacturers have warned.
Make UK, an industry body representing 20,000 manufacturing firms across the country, said Brexit’s effects undermined optimism among its members and the changes it involves amount to a “possible death of the just-in-time supply chain business model”.
Two-thirds of companies worry about delays and red tape this year and admitted that Brexit has moderately or significantly affected their business since the transition period ended last January.
Lack of EU migrants is ‘key concern’
In the 2022 MakeUK/PwC senior executive survey, company leaders said Brexit is one of their biggest concerns – with key issues being a lack of access to EU migrants, additional costs to meet different regulatory aspects and delays at customs.
“It is clear from these figures that Brexit and the global Covid-19 pandemic have had a scarring effect on the mentality of many businesses, which are traumatised by the ongoing delays and disruptions to their supply chains,” the report said.
The findings come as the UK’s economy slowed down at the end of 2021, as Omicron hit demand for foods and services, according to The Guardian.
Another survey of chief financial officers of big companies by Deloitte, showed financial executives thought Brexit would be a big negative aspect for both trade and migration between the UK and the EU.
Meanwhile, it emerged that UK firms are paying much more to produce carbon dioxide than EU companies because of the Tories’ refusal to link Britain’s carbon market to the bigger European market after Brexit.
UK firms already pay more to produce CO2 than EU companies
The price differences amount to a huge competitive disadvantage compared to EU rivals amid rising energy prices and is also not beneficial to the environment, according to The Guardian.
Over the past month, UK companies have been paying, on average, a premium of about 10 per cent more than their European counterparts because Britain’s market is much smaller than the EU emissions trading scheme (ETS) which has been established for 17 years.
According to experts, the best long-term environmental and economic measure Tory ministers could adopt is a close relationship with the EU market.
Tom Lord, head of trading at Redshaw Advisors, said: “UK companies are paying substantially more than they are in the EU. The big problem for the UK market is liquidity, and the fact that it is new.
“The EU has a historic surplus [of permits] to fall back on, but the UK has pent-up demand and only a drip-feed of supply.”
The government has not said why it has decided to operate separately from the EU, but the move suggests a ‘hard Brexit’ strategy, avoiding ties with the bloc.