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Brexit and the impact on the job market

Published: Wednesday 13th February 2019

It’s clear already that many brands are trying to safeguard their businesses against the potential impact of Brexit by leaving the UK and setting up new operations in the EU. Panasonic is planning a move to the Netherlands, while it’s rumoured that Japanese retailer, Muji, is heading for Germany. Even Lloyds of London is moving its insurance operation to Brussels. Last summer, EY, formerly Ernst & Young, revealed that 34% of the companies they monitored had intentions to move at least some of their operations out of the UK.

Man in a suit, holding his luckage looking at a world map ahead of Brexit

Will automotive jobs be hit because of Brexit?

If, as those figures suggest, a third of all companies are really planning to move part of their operations to the EU, the question has to be, what does this mean for the UK employment market? Certainly, if these are big manufacturing brands in areas of low employment, then there will be a big impact on local job markets and communities.

One industry that’s sure to suffer is the car sector. There have already been losses of automotive jobs at Ford and Jaguar Land Rover (JLR). Although the two firms say that this isn’t directly due to Brexit, both have also warned of the consequences of a no-deal Brexit. Certainly, a bad Brexit will mean tariffs for the £17 billion worth of cars that the UK exports to Europe. Avoiding that means shifting operations closer to the markets.

Car manufacturing plant reconsidering it's position in the UK ahead of Brexit

Jaguar Land Rover confirmed in January that it was to cut 4,500 automotive jobs in Birmingham, citing a slump in demand for diesel cars, a sales slowdown in China and uncertainty over Brexit. The firm currently employs close to 39,000 workers in traditional employment black spots such as Castle Bromwich, Solihull, Wolverhampton, and Merseyside. The firm let already let 1,500 workers go last year. While the firm didn’t directly blame Brexit, the manufacturing of a deluxe SUV is moving to a new plant in Slovakia. This will directly affect jobs in Coventry where the vehicle was due to be made. What was frustrating for many is that the new plant in Slovakia was approved for a grant of £125 million from the EU.

Plane manufacturing companies reconsider UK ahead of Brexit

The ‘knock-on’ effect for other industries post Brexit

Both Airbus and BMW are considering moving their operations too, but the impact of all of this will be felt in other industries too. Automotive parts, for examples, made in the UK by other manufacturers will either have to be exported to the EU under the threat of tariffs or made elsewhere. What’s more, these products will have to be imported back into the UK for buyers here, appearing in showrooms with price tags boosted by imports tariffs, directly impacting car sales and dealerships. There has already been a fall in new car registrations as consumers put off big purchases.

The fact is, most luxury brands, like car companies, are global operations, which generate a small fraction of their profits in the UK. If barriers to trade are raised after Brexit, they can and will move elsewhere. Jobs will be lost, but perhaps the biggest loss could be UK’s heritage as one of the global leaders in car manufacturing.

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