As much as £3.5bn could be wiped off UK automotive exports if a Brexit deal isn’t secured and ratified by March 2019, and that may be just the start.
UK automotive exports could fall by 6.5% in 2019 alone in a no trade deal scenario, a global leader in trade credit insurance has warned.
The forecasted impact on UK manufacturing has been published as part of Euler Hermes’ latest Country Report on the UK economy.
The report predicts that average turnover growth of UK manufacturers will slow to 3.5% next year before contracting by -1.0% in 2019 should the UK leave the EU with no trade agreement in place and is forced to trade under World Trade Organisation (WTO) terms, or if limited or extensive Free Trade Agreements (FTA) are secured.
Chemicals would reportedly be the hardest hit non-services industry should WTO trade terms be imposed, followed by machinery and commodities, the report forecasts.
British chemical businesses could witness a £5.6bn fall in exports if the UK left the union without a deal in place. The losses would be reduced to £2.3bn for a limited FTA, and £0.9bn with an extensive FTA, in place.
The machinery and commodities industries could see the next greatest drops in export values under WTO terms in 2019 with declines of £5.2bn and £4.8bn, respectively. The automotive industry, could suffer a £3.5bn fall, compared to £1.5bn if a limited FTA were in place and £0.6bn with an extensive FTA.
The forecast expects export losses in the services sector to reach £35.9bn should the UK government opt for a no-deal Brexit.
Euler Hermes defines a transition deal as a bridge solution in which the UK will remain in the Single Market in exchange for making continued contributions to the EU budget, sticking to the vast majority of EU regulations and imposing no migration controls until a final trade deal is concluded, perhaps as early as 2021.
The company believes a transitional agreement is needed as the UK will officially exit the EU as soon as 2019.
