More than three-quarters of businesses want a trade deal to be agreed between the UK and the EU, according to the latest CBI survey. Meanwhile research from Make UK shows that the EU remains overwhelmingly the largest market for manufactured goods.
The CBI Growth Indicator found that 77% of businesses overall wanted a Brexit deal, with only 4% preferring no deal. Nearly half said that the impact of the Covid-19 pandemic had reduced their ability to prepare for Brexit. Support for a deal was higher among manufacturers, at 83%, and those in the distribution industry, on 86%.
In the week in which the UK and EU agreed to extend negotiations for a further month, CBI director general Dame Carolyn Fairbairn called for “political leadership and the spirit of compromise”. She said: “A deal can and must be made. Businesses face a hat-trick of unprecedented challenges: rebuilding from the first wave of COVID-19, dealing with the resurgence of the virus and preparing for significant changes to the UK’s trading relationship with the EU. More than three-quarters of businesses want to see a deal that will support people’s jobs and livelihoods.”
However it emerged that car makers could face higher export tariffs even if a trade deal is agreed, if their products contain too high a proportion of components from non-EU countries, after the EU rejected an argument that such parts should be deemed British under rules that will apply to exports from January.
Meanwhile, the latest annual research report from Make UK and Santander UK highlighted “the critical importance of avoiding barriers to trade between the UK and the EU.” UK Manufacturing Facts 2020/21 found that the top six European markets account for a third of total manufacturing exports.
Though the US was the single largest importer of UK manufactured products, seven out of the top ten UK export markets are in Europe, including Germany (2nd), France (3rd) and Ireland (4th).
Exports to the top six European markets – Germany, France, Ireland, Netherlands, Switzerland and Belgium – were worth £117.4bn out of total global exports of £367bn. Just under half (46%) of all UK manufactured goods were exported to European countries, totalling £169bn. Exports to the US increased by 19% last year, rising to £54.4bn.
The UK retained its position as the world’s ninth largest manufacturer. By sector, transport manufacturers were the largest exporters, on 22%, and also generated the greatest proportion of R&D spending, at 36.4%.
Make UK chief executive Stephen Phipson said: “These figures lay bare the overwhelming importance for manufacturers of trade with our closest market and the need to avoid imposing any barriers which will make this more difficult.”
Modelling by the thinktank UK in a Changing Europe and the LSE of the impact of a no-deal Brexit suggests the total cost to the UK economy over the longer term would be two to three times as large as that forecast by the Bank of England for the impact of Covid-19.