Whether you voted ‘in’ or ‘out’ of the EU, following months of speculation Brexit is reality.  The resulting turbulence in the financial markets is beginning to settle and here at Presto we are asking ourselves what Brexit means for UK Manufacturing?

This situation is new to us yet here we are without leadership from our Government yet many of us have businesses to run, customers to satisfy and employees to pay.

The UK is currently the 11th largest manufacturing nation in the world and directly employs 2.6m people1 and manufacturing related product sales reached £360.60bn in 2015.2  On that basis it is hardly surprising that EEF, the manufacturers’ organisation, told the government immediately after Brexit that work to ‘shore up’ confidence and secure our industrial future was a priority!3  From the myriad of statements made by industry leaders across the media one thing is clear; a desire for stability.  However, in the Financial Stability Report Press Conference on 5th July 2016 Mark Carney, Governor of the Bank of England stated that the UK economy has entered “a period of uncertainty and significant economic adjustment.” 4

In the wake of Brexit we have been particularly interested to see how the decision may impact the following:-

  • Export of manufactured goods
  • Foreign Direct Investment (FDI) in the UK
  • Skills in the manufacturing sector

Export of Manufactured Goods

Over 50% of UK exports go to the EU and it is difficult to know how this will be impacted.  Whether the UK is in or out of the EU, European standards must be adhered to and a new UK-EU trade deal will be negotiated in due course.5   Article 50 of The Lisbon Treaty6 sets a two-year window to negotiate a new legal basis for Britain’s trade relationship with the EU although there is potential to extend this period.  This will be an extremely complex process and the question is will the EU try to enforce tariffs and quotas on, for example, the import of cars?  The UK could choose to do the same on a ‘tit for tat’ basis which would result in the consumer losing out on both sides of the channel.

Foreign Direct Investment in the UK

The pound hitting a 31 year low against the US Dollar has been splashed across the media.  There is no doubt that a transatlantic holiday will be more expensive but “a drop in the value of sterling may make the UK a magnet for trade”.  No one knows for sure but the hope is that global markets will be keen to do deals with the UK7 but we have already seen foreign investors such as Siemens take a cautious approach.  The company confirmed that while it would continue with plans for a new £310m manufacturing plant in Hull, as a result of Brexit proposals to expand the site were likely to “stall” until issues relating to the UK’s tariffs and trade with the EU have been resolved.8

In 2014 the UK attracted more Foreign Direct Investment (FDI) than any other EU country.  However, it is understood that many investors consider the UK’s access to the EU an integral part of their decision.5   It will be interesting to see how potential investors react to an ‘independent’ UK and whether the level of FDI fluctuates over the coming months.

Skills in the Manufacturing Sector

British industry continues to suffer from a skills shortage and the end of free movement could exacerbate this problem.  The car industry, as an example, has 30,000 vacancies and needs to be able to recruit skilled workers from Europe.9  As of 29th June UK car manufacturing output was up 10% on 2015 and the Society of Motor Manufacturers and Traders (SMMT) reported that revenues in the industry for 2015 were £71billion, a significant contribution to the UK economy.10  In addition FDI could be impacted as potential investors require assurance that if they invest in UK manufacturing there are sufficient skilled and unskilled staff available for their facilities.

We are living in changing times and there is no doubt that whether you voted ‘in’ or ‘out’ it is in all our interests to make this work.  With change comes opportunity!

What do you think?  How do you think Brexit will impact your business?  We’d love to hear your thoughts so give us a call on 01865 883508 or e mail us at sales@prestoeng.co.uk.

For more information about Presto Engineering please visit our website here and if you would like to discuss a project with us please call us on 01865 883508 or e mail Julian at sales@prestoeng.co.uk.


1 The Manufacturer, 2015.  UK Manufacturing Statistics [online] Available at http://www.themanufacturer.com/uk-manufacturing-statistics/ [Accessed 6 July 2016]

2Office for National Statistics, 7 July 2016.  Manufacturing and Production Industry [online] https://www.ons.gov.uk/businessindustryandtrade/manufacturingandproductionindustry [Accessed 7 July 2016]

3EEF – The Manufacturers’ Organisation, 27 June 2016. Manufacturers to tell Government: avoid economic limbo and move quickly to secure Britain’s industrial future [online] Available at https://www.eef.org.uk/about-eef/media-news-and-insights/media-releases/2016/jun/manufacturers-to-tell-government-avoid-economic-limbo-and-move-quickly-to-secure-britains [Accessed 7 July 2016]

4Bank of England, 5 July 2016. Financial Stability Report Press Conference [online] Available at    http://www.bankofengland.co.uk/publications/Documents/fsr/2016/fsrspnote050716.pdf [Accessed 7 July 2016]

5DLA Piper Manufacturing Matters (UK), February 2016. Brexit: Key questions for the UK’s manufacturing industry [online] Available at https://www.dlapiper.com/en/us/insights/publications/2016/02/manufacturing-matters-february-2016/brexit-implications-for-manufacturers/ [Accessed 7 July 2016]

6The Lisbon Treaty, 1 December 2009.  Article 50 [online] Available at http://www.lisbon-treaty.org/wcm/the-lisbon-treaty/treaty-on-European-union-and-comments/title-6-final-provisions/137-article-50.html [Accessed 7 July 2016]

7KPMG, 24 June 2016.  What does Brexit mean for the manufacturing industry? [online] Available at https://home.kpmg.com/uk/en/home/media/press-releases/2016/06/what-does-brexit-mean-for-the-manufacturing-industry.html [Accessed 7 July 2016]

8The Guardian, 28 June 2016.  Siemens freezes new UK wind power investment following Brexit vote [online] Available at https://www.theguardian.com/environment/2016/jun/28/siemens-freezes-new-uk-wind-power-investment-following-brexit-vote [Accessed 7 July 2016]

9The Telegraph, 28 June 2016.  Made in Brexited Britain – how the referendum will impact manufacturing [online] Available at http://www.telegraph.co.uk/business/2016/06/28/made-in-brexited-britain—how-the-referendum-will-impact-manufa/ [Accessed 7 July 2016]

10Business Reporter, 29 June 2016.  Single market European exports ‘crucial’ say motor industry leaders [online] Available at http://business-reporter.co.uk/2016/06/29/single-market-european-exports-crucial-say-motor-industry-leaders/ Accessed 7 July 2016