UK manufacturing firms could begin cutting investment and jobs within months unless the Government radically clarifies its aims for the Brexit deal, an industry body has said.
Terry Scuoler, chief executive of EEF, which represents the UK’s manufacturers, is addressing the President of the European Parliament, Antonio Tajani, in Strasbourg on Tuesday.
He will say that British firms face a “tipping point” well before March 2019 when the negotiations are supposed to be complete and must make decisions on investment and jobs within months.
Mr Scuoler will say: “The UK Chancellor, Philip Hammond, speaking in Germany last week, set out a vision for growth in the UK and in Europe. He was right to highlight our joint interests amid the complexity of the Brexit negotiations. Many of our industries are interconnected.
“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 under way.
“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.
“They need to know much sooner what transitional arrangements will be in place, and for how long. A failure to do so will damage our collective economic interests, a situation which would be as tragic as it would be harmful.”
The news comes just a day after manufacturing data showed activity came in below expectations in June, with the latest snapshot survey showing a moderation in the rate of growth.
The Purchasing Managers’ Index was 54.3 in the month, below the 56.3 recorded in May and the 56.3 pencilled in by City of London analysts.
Any reading above 50 indicates growth and the long-run average for the series is 51.6.
Uncertainty around Brexit has caused firms to stockpile unprecedented levels of savings while investment has stagnated, according to a recent research note by Pantheon Macroeconomics.
Government assurances that the UK is heading for a soft Brexit with continued access to the EU single market would encourage firms to release some of the £648bn they now have stashed in banks, delivering a “significant windfall” to the UK economy Pantheon said.
The Treasury and business voices have been boosted since the election, which has been read as a rejection of Prime Minister Theresa May’s hard line on Brexit.
Civil servants are now reportedly telling ministers there will have to be a trade-off between access to the single market and political control.
Foreign Secretary Boris Johnson had previously claimed Britain could “have its cake and eat it” suggesting there would be no need to make any concession over immigration or court jurisdiction to get full trade access.
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