What does an EU Referendum mean for the manufacturing sector?
By Karen French, partner, Squire Patton Boggs
We recently hosted a series of roundtable discussions with leading manufacturers in the region to explore issues we identified in a major manufacturing survey conducted in partnership with TheBusinessDesk.com; our aim was to gauge levels of confidence within the sector and to determine what businesses want to see from the Government over the course of the next 12 months to sustain growth.
Top of the agenda was membership of the EU, with manufacturers in Yorkshire expressing concern that the UK’s exit from the EU would halt growth and damage the sector. Many manufacturers believe there is a need for a strategy to enable them to collaborate and voice these concerns to the government.
Whilst the manufacturing sector, much like other business sectors in the UK, is keen to see reform around membership of the EU, the timing of the referendum is key in view of the potential impact on investor confidence in the UK. From our discussions with manufacturers and industry bodies, the overriding concern was the need for sufficient time to properly debate the issues, whilst balancing the risk of disruption if there was a long delay in the referendum taking place.
The sector has also voiced concerns about access to markets should there be an exit from the EU. Europe remains the UK’s largest trading partner, accounting for an estimated 51% of all goods exports in 2013, and to disengage from it would mean that manufacturers will still bear the cost of compliance but face barriers in trading with Europe. But more than that, membership also enables the UK to work as part of the EU to secure trade deals with the rest of the world. To be outside the EU could be catastrophic for our manufacturers and damage future growth opportunities.Furthermore, a break from Europe is likely to lead to a greater widening of the skills gap; whilst the UK is working hard to develop the STEM agenda, manufacturers are still reliant on Europe to fill their skill requirements. Free movement of people is essential to support growth in what is still a fragile sector in the UK.
UK manufacturers strongly believe that their economic wellbeing is linked to EU membership and a ‘wait and see’ approach is too risky. Indeed, Sir Mike Rake, former president of the CBI, has urged businesses to “turn up the volume” about the benefits of EU membership and to make a stronger case for Europe. Manufacturers need to unite behind this message if they want their voice to be heard.
