Industries Warn of Potential Downsides to Hard Brexit

Several major industry bodies have warned that their members could be badly damaged by government plans to end UK alignment with EU regulations.

Chancellor Sajid Javid recently made clear in an interview with the Financial Times that “there will not be alignment” with European rules after the UK departs the European Union.

In reference to the potential ramifications for businesses of that divergent approach to leaving the EU, Mr Javid said that “some will benefit, some won’t”.

Responding to those comments, leaders of various industry trade bodies have indicated that manufacturing companies in particular could be badly affected by what might be characterised as a ‘hard Brexit’ situation.

Mike Hawes from the Society of Motor Manufacturers and Traders (SMMT) said in a statement that he wants to ensure that British-made vehicles can be sold into the EU without any extra paperwork or tariffs once Brexit has officially happened.

“We want to work with government to help reach a mutually beneficial arrangement on regulation that safeguards UK manufacturing and consumer choice,” he said in a statement.

Mr Hawes went on to say that “additional requirements” made of carmakers either from the UK or the EU could add “billions” to the costs of operating for companies across the automotive sector.

“Automotive trade between the UK and EU is uniquely integrated and our priority is to avoid expensive tariffs and other ‘behind the border’ barriers that limit market access,” the SMMT chief executive said.

Carolyn Fairbairn, director general of the Confederation of British Industry, said she hoped that the UK didn’t diverge from EU regulations simply because it will have the option to do so after Brexit.

“For some firms, divergence brings value, but for many others, alignment supports jobs and competitiveness – particularly in some of the most deprived regions of the UK,” she said.

The Food and Drink Federation (FDF) has expressed concerns that diverging entirely from EU regulations will result in an increase in checks and processes for UK-based companies, which could then lead to price rises for consumers.

“This represents the death knell for frictionless trade,” Tim Rycroft, the FDF’s chief operating officer, said in response to Mr Javid’s recent remarks.

The chancellor told the FT that businesses have known since 2016 that the UK was going to leave the EU and suggested that they would need to adjust to whatever consequences arise as a result of that process.