A leading association of British manufacturers has told the country’s prime minister that a Brexit without a new trade deal with the EU would be a disaster as firms would have to bear the brunt of future barriers.
UK Prime Minister Theresa May’s recent threat she might take the country out of the European Union without a new trade deal has not gone down well with British manufacturers.
Their EEF umbrella organization said Monday a Brexit without a trade deal with the EU would be disastrous for manufacturers in the UK as they would have to bear the brunt of any fresh barriers.
“The idea of being able to walk away empty-handed might be a negotiating tactic, but it would in reality deliver a risky and expensive blow,” EEF Chief Executive Terry Scuoler said in a statement.
Back to WTO tariffs?
Theresa May plans to trigger the two-year Brexit process on Wednesday and has warned the remaining 27 EU member countries that “no deal will be better than a bad deal.”
May has signaled that control over immigration is her priority while conceding that Britain must give up its membership of the EU’s single market and customs union in order to achieve that.
But in the absence of a new deal, trade between the UK and the EU would default to WTO rules and tariffs.
The EEF said British manufacturing exports to the bloc including cars, chemicals and machinery could face tariffs averaging 5.3 percent. It added that there was also the risk of other obstacles to trade through customs procedures and higher compliance costs.
Over half of Britain’s manufactured goods (measured by value) go to the EU, with manufacturing accounting for roughly 10 percent of the UK’s economy.
Companies in the much bigger services sector are also worried about their future access to the EU’s single market, especially in the banking industry.