Brexit – the implications for manufacturing & engineering
The recent UK referendum decision will have important implications on the UK manufacturing sector. In the short term it will be very beneficial to primary UK exporters due to the recently devalued pound, where foreign customers will be basically receiving a 10% discount on their goods, this will be good news for the 105 billion pounds exported to the EU in 2014.
Over the long term, much of what happens to UK manufacturing depends on how Britain is able to negotiate its post-EU place. As EU supply chains will depend on the UK being able to have a Norwegian or Swiss relationship with Europe or better if not then this can cause a lot of pain as 46% of UK manufactured goods head across the channel and has the potential to cause supply problems.
If the EU looks to spite the UK for leaving it, then the UK will have to depend on its new international trade deals to plug gaps caused by the disruption from Europe. However this is dependent on many things, as the UK will still have a lot its favour such as central time zone, an international language, highly skilled workforce, and legal system par excellence. Though it will only contribute 3.5% of global GDP this may lead to less favourable negotiating position than when the UK was part of the European Union which made up 23% of global GDP.