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Could Brexit save UK manufacturers?

Published: Thursday 26th November 2020

Despite continued bad news, some experts are asking could Brexit save UK manufacturers? The ongoing pandemic and approaching Brexit are leading to predictions of a boom for UK manufacturers. Economists are predicting more businesses are seeking to keep their production in the UK. This has led to estimates of a £4.8bn orderbook for British factories over the next 12 months. Sectors likely to be part of this increase include food production, fashion, DIY and homewares. Companies that have already stepped up UK production include Asos and Ted Baker. The changes are being brought about following problems in global supply chains. So could Brexit save UK manufacturers?

Cargo container with UK flag on it to ask question could brexit save uk manufacturers?

Global supply chains in many sectors have been unable to react quickly enough to shock events and fast changing consumer trends. This is leading many organisations to look within the UK rather than out of it. Brexit is also causing this swing to UK manufacturing. A no-del Brexit is likely to result in high tariffs for many goods. Estimates include tariffs of up to 12% on clothing and 16% on footwear. The growing demand for sustainability and eco-friendly supply chains is also helping feed the demand for UK-made goods.

Is UK manufacturing ready?

The expected increase in demand for UK-made goods by retailers is leading to questions about UK manufacturing. One of the biggest concerns is that UK manufacturers are simply not ready for this expected increase in demand. An unexpected benefit of the pandemic has been it focusing UK manufacturers to look more sharply at the issue. Unite, is a group of UK manufacturers that got together in response to the Covid ventilator shortage. Helping UK manufacturers work together to bring production to the UK, the group now has 300 members. Tony Hague, chief executive of one of these companies spoke about the challenges ahead. He said: “It’s not a short-term thing. It takes a lot of time and effort to move a supply chain back to the UK. You don’t just do it in a few months.”

Map of UK at night regarding could Brexit help UK manufacturers?

Will retailers increase demand as expected?

The Confederation of Business Industry (CBI) represents roughly 190,000 UK businesses. A survey by the CBI revealed retailers are still trading significantly lower than last year. The report revealed the retail sector continues to suffer more than most. Clothing and footwear retailers are among those seeing the biggest falls in trade. However, the announcement of a Christmas trading period has given renewed hope to the high street. Ben Jones, an economist at the CBI, said: “For many retail sectors, particularly those with less of an online presence, conditions remain extremely challenging. Retailers will be looking to salvage what they can from a very difficult year. Many will be greatly relieved by the announcement that they can reopen over the crucial Christmas trading period.”

Retail figures hiding uncomfortable truth

The Office for National Statistics (ONS) revealed that retail spending rose 5.8% in September over last year. Whilst the figures suggest some UK sectors are seeing recovery, on closer inspection it reveals an uneven playing field. Despite the increase, traditional ‘bricks and mortar’ retailers have seen a 3.3% drop in spending since the before the first lockdown in February. Therefore, the rise in overall retail spending is seen as being driven by the e-commerce industry. Since February, online sales have increased 52%. This suggests only retailers with a strong online presence have benefitted from the increase in shopping this year.

 

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