Brexit: How could it affect different industries in the UK?

Brexit: How could it affect different industries in the UK?

Pro-EU demonstrators outside parliament. Image: Getty

Tuesday, June 26, 2018

London Mayor Sadiq Khan told MPs today that the government risks damaging the economy if it prioritises the trade of goods over services in Brexit negotiations.

Speaking to the Public Administration and Constitutional Affairs Committee, he said that services - such as accounting, finance and law - make up around 40% British exports.

The service economy makes up 92% of London and Manchester’s businesses, 91% of Edinburgh’s and 83% of Leeds.

"Any deal struck by the Government that focuses just on goods, at the expense of services, could seriously damage our economy,” he said.

"The Government's current approach is further evidence, as if we even needed it, that the Prime Minister has her priorities all wrong.

"If the Government does not change its approach and strike a deal that secures access to the single market for services, this trend [ of businesses moving out of the UK] will only continue.”

His warnings are not the first of their kind. Several industries have warned that business will be affected or they may move out of the UK following Brexit. Here’s who’s said what.

 

Car industry

The Society of Motor Manufacturers and Traders warned that almost 860,000 jobs could be at risk.

The car industry employs 856,000 people in the UK, over 150,000 of which are on the production line, and could be affected by Brexit because of the speed at which parts need to be imported.

Read more: What is the customs union and why is it important?

At the moment, car parts often cross the Channel just hours before they’re needed on the production line. The UK’s future trading relationship with the EU hasn’t been decided yet, so there could be extra checks or tariffs on imports.

BMW has said 8000 jobs could be at risk if it has to move production out of the UK after Brexit, and Jaguar Land Rover is moving the production of its Discovery model to Slovakia.

 

Consumer

General trading with the EU is significant. In 2016, the value (£318 billion) of goods imported from the EU to the UK was more than goods imported from the rest of the world (£243 billion).

The UK exported £284 billion of goods to the rest of the world in the same year, and £235 billion to the EU.

Read more: No-deal Brexit could cost £20 billion, warns HMRC boss

A trade deal has not yet been struck - we don’t know if the UK will remain in the single market or European Economic Area.

Donald Trump is keen to discuss post-Brexit trading with the US, according to the US ambassador.

 

Farming

It’s been claimed that 25% of UK farms could go bankrupt after Brexit, when they lose their EU subsidies.

The Department of Environmental and Rural Affairs (Defra) will replace this scheme with payments that reward farmers for environmental schemes, rather than them getting one lump sum per year from the EU.

Read more: Consumers face Brexit food price increase, peers warn

Farms also use seasonal workers, many of whom are from the EU. There is no official data on how many seasonal workers are in the UK at any one time but the latest figures from Defra estimated there were around 64,200 in 2016.

 

Pharmaceuticals

A report by the London School of Economics says the pharmaceutical industry has grown rapidly in Europe over the last decade, and that the UK is a “key player”, accounting for 10% of the sector’s production and employment.

It may be more difficult for the UK to remain part of the industry after Brexit, not least because of regulations around clinical trials.

A PwC report explains that trials must comply with the EU’s Clinical Trials Regulation. Currently its policies are influenced by the UK’s Medicines and Healthcare Regulatory Agency (MHRA), but the MHRA would have no impact on EU laws after Brexit.

That could mean it would be too difficult and costly for the UK to participate in clinical trials.

 

Airlines

Airbus has threatened to leave the UK if it doesn’t stay in the customs union and single market, and doesn’t strike up a new trade deal.

EasyJet has applied for a new air operator's certificate (AOC) in Austria to allow it to continue flying in the European Union after Brexit, setting up a headquarters in Vienna.

Under EU rules, airlines that fly in Europe must have 50% European shareholders, which some British airlines may not meet.

The UK will also no longer be part of the EU-US open skies agreement, which means it might be subject to different regulations from the US.

 

Finance

The finance industry is estimated to be around 10% of the UK’s economy.

A report last year by finance industry think tank TheCityUK said every person working in finance - around 2.2 million people - contributed 1.5 times more to the economy than employees in other sectors.

Some estimates say a quarter of the finance industry’s revenue comes from EU business.

In January the Financial Times reported that EU negotiators rejected the notion of a finance deal with the UK in favour of it having the same “conditional” access as other third countries like the US.

Some banks are already turning attention to locations outside the UK.

Goldman Sachs is doubling its Frankfurt workforce and expanding other EU sites, and is relocating a small number of UK workers. Morgan Stanley is also adding to its Frankfurt staff.

HSBC and JP Morgan are also reportedly relocating 1,000 jobs each, with the former going to France.

Merrill Lynch, which is owned by the Bank of America, is planning to relocate 125 staff to Dublin.

 

The NHS

Some 10% of doctors and 4% of nurses and midwives are from the EU, according to analysis by FullFact. Non-EU migrants make up a higher portion of NHS employees.

Currently, non-EU medics must come to the UK on a Tier 2 visa.

It had an annual cap of 20,700 people until Sajid Javid promised to relax the cap to allow more skilled foreign workers in.

After Brexit, EU doctors and nurses would likely have to come on the same visa.

Comments