The UK’s departure from the European Union has been delayed once again and we are still unclear as to whether we will be leaving with or without a deal. If the outcome is a no-deal Brexit, businesses across the UK will be impacted. With manufacturers seeing exports fall behind domestic orders for the first time since 2016, we’re looking at how the manufacturing industry in particular could be affected below.
With the economy in a state of uncertainty, combined with increased inflation, it’s worth considering the change in consumer behaviour. If consumption is reduced, this could lead to a drop in revenue for manufacturers and their customers.
After leaving the EU, UK businesses will have to pay tariffs on the majority of goods travelling into the single market. Manufacturers will either have to pay the tariffs on behalf of their customers, which means that their finances would take a hit or pass the costs on. The latter could result in a drop in order numbers, which would also impact their finances.
Due to the increased costs of importing goods and services, a no-deal Brexit will lead to inflation, price rises and higher costs for businesses and consumers. In addition, the value of the pound will fall, making British goods cheaper overseas and overseas goods more expensive for UK businesses.
The latest study by the HIS Markit/CIP UK Manufacturing Purchasing Managers’ Index (PMI), which assesses the level of activity in the sector, showed that the rate of job losses in the industry has accelerated to a six-year high. Following Brexit, changes to UK immigration and border controls may increase labour costs and reduce the UK talent pool.
What can manufacturers do to prepare?
If you are taking measures to prepare for Brexit and the points above, it’s vital to make sure that you are not underinsured by disclosing any changes to your broker or insurer. That way, in the event of a claim, you will have adequate insurance cover in place and avoid claims settlements being avoided or reduced.
Don’t wait to update your broker. If something changes, it’s important to check against your insurance policy limits and inform them immediately, not wait until renewal, if you need to increase your cover.
Have any questions?
If you need advice on the above or a related issue, contact our Manufacturing Executive, Mark Slade today on 02920 855246 or at firstname.lastname@example.org.