June 12, 2019 superfreak8

Brexit uncertainty hampers UK aerospace growth

UK aerospace trade association ADS is seeing a slowdown in the country’s supply chain activity and investment as a result of the uncertainty surrounding Brexit.

Chief executive Paul Everitt said during a briefing on 11 June that the UK industry is growing at a “significantly lower rate” than in other countries, and that demand at UK suppliers declined in 2017 and 2018 – a period during which, he notes, the sector experienced “significant growth elsewhere”.

He says that UK suppliers were not invited to tender for civil aerospace contracts during the months ahead of the UK’s previous target of exiting the EU on 29 March.

Existing contracts were not terminated, but UK suppliers did not win follow-up deals as a result of uncertainty around the country’s future trading conditions, Everitt says.

Investment in UK research and development declined by around 20% in 2017, according to ADS.

“Large businesses made it clear that they avoided investment in the UK,” Everitt says.

Meanwhile, UK suppliers faced additional costs for contingencies to cover a potential no-deal Brexit.

ADS estimates that UK aerospace companies spent a total £600 million ($753 million) on stockpiling and legal costs to prepare their businesses.

Noting comparatively long investment cycles and the UK’s strong aerospace heritage, Everitt describes the whole industry’s attitude toward the Brexit process so far as “patient”. But he reiterated ADS’s previously stated position that a departure from the EU without a withdrawal agreement would be “the worst possible outcome”.

In that scenario, ADS predicts a “slow and steady erosion of competitiveness” for UK manufacturers, with major investments for future programmes being directed to other locations.

The possibility of the UK reaching free trade agreements with countries beyond the EU after Brexit, will cover “nowhere near… the cost impact that we would suffer from being outside the European Union with significant trade facilitation costs”, Everitt says.

As the process of selecting a replacement for prime minister Theresa May is expected to take until late July, Everitt expresses doubt that a future UK government will be able to reach an agreement with the EU before the latest Brexit target date on 31 October.

ADS supported the outgoing government’s UK-EU withdrawal proposal, which failed to gain parliamentary approval.

Everitt notes that the organisation viewed the proposal as “not… fantastic” but says that “it provided us with stability… and there was sufficient licence in the scope of the future relationship to be able to address the issues that were of most interest to us”.

He is concerned that “too many people really are misinforming their audiences” about the challenges of Brexit and options to resolve them.

“I hope that in the coming weeks and months there is a more honest dialogue around what our relationship with Europe should be [and] also the consequences and impact of just walking away,” he says.


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