Which regional industries will be most affected by Brexit?
BREXIT: Where could the impact be?
By Grimsby Telegraph | Posted: 11 Apr 2017
Car-making and chemicals will be the industries most affected by Brexit in Yorkshire and the Humber.
By triggering Article 50 this past month, Prime Minister Theresa May officially started the formal process of leaving the European Union, which will lead Great Britain out of the European single market.
Official figures show 55 per cent of exports from Yorkshire and the Humber currently end up in the EU.
Yorkshire and the Humber exported £13.9 billion globally in 2016, and £7.6 billion of that came from trade with the European Union.
Car-making, which accounts for almost one third of the total region exports, or 30 per cent, is likely to suffer more from Brexit. In 2016, Yorkshire and the Humber exported machinery and transport equipment £4.2 billion worth.
Grimsby and Immingham are major ports for import and export of vehicles, and while the statistics suggest it could be a risk, BMW has committed to a £25 million new import facility at North Killingholme.
Chemicals account for 23 per cent of the total exports from the region or £3.2 billion, with the largest cluster on the Humber bank.
And the industry body behind the Humber’s vital chemical sector has already set out its Brexit manifesto.
Worth £6 billion to the regional economy alone, the process industry supports thousands of jobs and provides a basis for a major contracting community too.
The cluster is a prime example of a united nations, with global flags hoisted, and several head offices in Europe.
It is also another crucial element of the ports sector.
Steve Elliott, chief executive of the Chemical Industries Association, has addressed the House of Lords EU External Affairs Sub-Committee on the issue and is calling for action in four key areas:
- Tariff-free access to the single market.
- The availability of skilled people.
- The supply of competitive and secure energy.
- A policy framework that encourages scientific progress, leading to sustainable growth.
Mr Elliott said: “In common with many internationally competitive sectors of the UK economy, the chemical industry wants to retain tariff-free access to the single market and a reassurance that it can continue to retain and recruit a skilled workforce from both within and outside the country. In addition, we need to ensure that in leaving the EU we retain a competitively priced and secure energy base and a science policy and supporting framework that incentivises innovation and growth.
“Bringing these four elements together offers the most persuasive case for chemical and pharmaceutical companies to continue investing with confidence in the UK, boosting growth and employment throughout the country”.
The majority of the UK’s chemical trade is with the EU, representing 60 per cent of exports, 75 per cent of imports – many of which are essential raw materials.
The CIA said reversion to World Trade Organisation rules and Most Favoured Nation tariffs will negatively impact trade in both directions, but particularly exports, as most value-added activities are subject to higher tariffs than raw materials.
While some petro-chemicals are zero-rated, many intermediate and speciality chemicals have tariffs up to 6.5 per cent.
A special ten-strong Brexit team has been pulled together, with strong interests in this area.
Calum Maclean, chief executive of Synthomer, and Richard Carter, managing director of BASF UK, both operate plants on the South Bank, while Stuart Arnott, president of global operations at Hull-headquartered Croda International, is also on board.
Given that the government will be spending months trying to work out new post-Brexit trading arrangements with Europe, where could be possible alternative markets for the Yorkshire and the Humber?
North America is currently the second biggest trade partner. In 2016, exports to the North America accounted for 16 per cent of the £13.9 billion of global exports, or £2.2 billion worth.
In 2016, the UK exported goods globally worth £290.7 billion, 49 per cent of which ends up in the European Union, or £142.9 billion.
England's exports account for three quarters of the total, worth £221.1 billion, with 48 per cent of that from trade with European countries, or £106.8 billion.
Car-making industries accounted for the most exports to the EU, 41 per cent, or £119.4 billion.
North America is the next biggest trade partner. In 2016, England exported £51 billion worth of goods to the North America, or 18 per cent of £290.7 billion.
Figures in £ million - Exports by SITC Section 2016
Food and Live Animals // 636
Beverages and Tobacco // 214
Crude Materials // 549
Mineral Fuels // 1,002
Animal and Vegetable Oils // 93
Chemicals // 3,165
Manufactured Goods // 2,371
Machinery and Transport // 4,197
Miscellaneous Manufactures // 1,578
Other commodities nes // 90
Total Exports // 13,895