Manufacturers Fear New Relationship With EU

Brexit

According to a recent survey published by Make UK and Pwc, the manufacturing sector is in fear of the UK’s new trading relationship with the EU.

The 2021 survey revealed that a third of companies feel their investment opportunities will decrease following the UK’s official departure, with only 18% of the 206 companies surveyed expecting it to increase.

26% also said exports to the EU will fall, with only a smaller proportion (16%) predicting a positive increase.

With this, the survey suggests many manufacturing businesses are adopting new strategies to build resilience by investing in people, new products, markets, and technologies.

Many companies have also suggested that the long-term opportunities will outweigh the risk, as many reveal they are hoping for a boost in productivity.

A third of the respondents also believe that the UK will attract less international talent, with only 11% believing the UK will become attractive and therefore putting a risk to the Government’s new immigration system said to help encourage high-quality talent to the UK.

But despite the effects of the pandemic, the survey does suggest a positive forecast for recruitment.

44% of companies expect to increase employee numbers compared to only 25% who are planning on reducing their headcount.

Other key findings revealed:

• 56% see a deterioration in the UK economy.
• 54% of companies are expecting to see an increase in their productivity in 2021.
• 51% believe the opportunities outweigh the risks to their business.
• 27% believe the risks are greater.
• 57% of manufacturers are investing in new product development.
• 46% are more negative about the prospects for the global economy.
• 48% hope to see a significant or moderate improvement for manufacturing in 2021.
• 47% see customs delays as a big risk for companies.
• 46% share concerns over further lockdowns.
• 39% see increased regulation costs a risk.
• 44% are committed to training.
• 37% plan on investing in Apprenticeships.
• 30% are planning to enter new markets in 2021.
• 25% are looking to identify new or additional suppliers in the UK.
• 40% of companies are looking to expand sales into non-EU markets. Asia (27%) The United States (28%)
• 14% believe big customers moving out of the UK will be a risk.

Make UK Chief Executive, Stephen Phipson said: “The transition to new trading arrangements with the EU was always going to be the biggest challenge facing manufacturers this year and the fact we have an agreement in place doesn’t alter that.

“However, just as the sector rose to the challenge of aiding the national effort at the start of the pandemic, it is clearly set to do so again as we re-build the economy and take advantage of the opportunities from digital technologies.

 “To ensure we cement the role of industry in the future economy we need to see a strategic vision from Government for the whole economy across the UK.”

Cara Haffey, PwC UK’s manufacturing and automotive leader said: “I found it heartening to see that so many respondents are focusing on strengthening business resilience by investing in their people and diversifying their trade models in 2021.

“UK manufacturers are resilient by nature and, with the right investor and government support, their agility and drive will enable them to build new trade networks and embrace the clean, green digital revolution, ensuring the UK remains a go-to destination for many more years to come.”

Access the full report here.

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