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  • Amid fears that Brexit could force some chemical manufactures to move overseas, the Chemical Industry Association (CIA) has reiterated what it wants to see from the final deal with the EU. Among its priorities are tariff free access to the single market, ‘access to appropriately skilled people’ as well as ‘regulatory continuation and consistency’.  

    Post-Brexit concerns for the pharmaceutical industry

    The pharmaceutical industry is also facing considerable uncertainty regarding the potential effects of Brexit.

    In June, the Association of the British Pharmaceutical Industry urged the sector to ‘prepare for a crisis’ should a deal not be made early, according to The Telegraph.

    In the worst-case scenario, the pharmaceutical sector could be left with restricted access when it comes to selling in Europe and be faced with substantial restructuring costs. In addition, there have been fears regarding access to medicines post-Brexit, although ministers have acted to quell these worries.

    ‘Hard’ or ‘soft’ Brexit?

    Pressure has been put on the Prime Minister to opt for a hard Brexit, which would mean exiting the single market.

    However, Theresa’s May’s failure to secure a majority in the recent general election means she doesn’t have the firm negotiating hand that she has hoped for; this might force the UK to take a different approach.

    And now there is talk that the EU might be prepared to allow the UK to stay in the single market, in what would be considered by some as a ‘soft Brexit’.

    Calls for a transitional deal

    Many in the business community and some ministers are keen to pursue a transitional deal to soften the impact of leaving the EU; this is a sentiment that is echoed by the CBI, and there has been pressure on the Brexit secretary David Davis to achieve this.

    Further the EEF, which represents manufacturers, has stated that businesses need to be informed about the nature of any transitional deal, including how long it will last for.

    At a recent conference, Terry Scuoler, Chief Executive of EEF, stated:

    “UK businesses need to know soon what arrangements will be in place after March 2019, to be able to plan, make investment decisions and have confidence that an orderly and carefully managed approach to Brexit is underway.

    “If they don’t have that assurance there will come a tipping point, sometime in 2018, when boards in the UK and elsewhere will need to make decisions based on the state of the negotiations at that point. They cannot wait until the end of the process for confirmation of a deal on our departure or future trading relationship.

    The CIA is also in favour of a transitional deal, stating:

    “We believe that staying in the single market for that appropriate transition period would help support trade, investment, jobs and overall economic growth in the critical time taking us to exit from the EU and our future new trading relationship.”

  • Concerns over an unexpected slowdown of the manufacturing sector led to a fall in the pound when the PMI figures were released in early July. The latest PMI figures revealed a fall to 54.3, however, the sector hasn’t fallen into contraction. Growth in exports also proved disappointing, as was the level of new orders.

    Business uncertainty is thought to be a contributing to the unexpected fall, but there are other issues too.

    Commenting on the figures, Rob Dobson, who serves as the senior economist at HIS Market said:

    “The main factor driving the broad slowdown in June was a steep easing in the rate of increase in new order intakes.”

    Manufacturing at a three-year high

    As George Nikolaidis, Senior Economist at the manufacturers’ organisation EEF, made clear, it’s not all bad news for the manufacturing sector.

    Nikolaidis stated:

    “Despite a broad-based slowdown in the rate of expansion in June, manufacturing activity for the last quarter still came in at a three-year high, pointing to a solid contribution from the sector to growth. This adds to recent data over the past few months indicating that industry will continue to support the UK economy by providing a counterweight to slowing services output.”

    The EEF has also stressed the importance of the government providing some clarity over its Brexit strategy so the manufacturing sector can start making firm plans regarding recruitment and investment.

    Economic activity slows among other sectors

    It should also be noted that the slowing in economic activity wasn’t just limited to the manufacturing industry; both the service and distribution sectors were affected in the last quarter, according to a CBI survey.

    Commenting on the latest survey, the CBI’s chief economist, Rain Newton-Smith said:

    “Growth has slowed across our surveys for a second successive month and expectations for the quarter ahead have cooled.

    "With the economy shifting down a gear, and higher inflation eating into household incomes, it’s vital the Government creates the right environment for businesses to continue contributing to the country’s prosperity.

    Manufacturing, productivity and innovation

    There have already been calls for the government to do more to enhance productivity and innovation in the manufacturing sector, which is going to be essential to all industries as the UK comes out of Europe. And in a press release issued by the CBI, it reiterated the need for government to assist businesses by providing support for improved innovation, infrastructure and exporting.

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