Following on from our last post, today we will be considering the possible impact of the EU referendum on UK trade and manufacturing businesses.
Like the majority of the issues surrounding the debate, there does not seem to be a clear right or wrong answer here, with a number of well respected bodies making seemingly contradictory arguments.
Possibly the biggest issue at play is that the UK exports just over 60% of it’s goods and services to the EU, so any change here will undoubtedly have an economic impact. In the event that we decide to leave the EU, we would have to re-negotiate trade agreements with several different parties and nations, most notably the EU. The two campaigns seems to be at loggerheads over how long this might take, with pro-leave organisations suggesting that these deals could be wrapped up in less than 6 months, while remain campaigners have suggested trade deals could take a decade or more to negotiate with some parties.
Some have suggested that being outside of the EU may allow the UK more flexibility to negotiate trade deals with emerging economies such as China and India, which will undoubtedly make up a larger portion of global consumption in the future.
Finally, the imposition of so called ‘tariffs’ on goods that we export to other EU countries could make UK products less attractive to foreign buyers if we decide to leave the EU. The US has recently imposed ‘tariffs’ of up to 500% on steel exports from China for example and we could potentially see similar punitive charges applied to our own goods by other nations.
Like all of the debate surrounding the EU referendum, there does not seem to be a clear argument either way. Some parties will argue strongly in one direction, with the opposing campaign presenting an almost completely contradictory argument. By definition, only one of them can be right.
The cynic in me would suggest that no-one really knows the full impact of an EU exit on trade and we would simply have to ‘wait and see’ how things develop over time.
