Brexit Changes Will Make Goods More Expensive— UK Manufacturers Warn
UM manufacturers warned that the changes introduced by government after Brexit will be adding soaring cost on top of what we are currently facing. The primary factor which might be causing this is the red tape and custom delays.
The body well known as Make UK, which represents 20k+ manufacturing firms in the UK, said that; the community is happy and optimistic. Although the divorce has taken a troll on their business health.
A survey has been conducted among 200+ industry leaders and the results were depressing. 60% said that Brexit had significantly affected their businesses. And there is a big chance that it will keep impacting them in 2022 also. This is again based on the fact that there will be custom delays due to checks at border and the new product labelling introduced recently.
Not just the delays, but also the additional costs added because of separate regulatory regimes in the UK will add more burden. Obviously, there will be more costs involve when it comes to the regulations needed to be followed when businesses import/export goods from Europe.
One of the main concerns in the top 10 was availability of labour. This is causing quite a lot of issues for construction industry. And this has been raised in the survey too.
The report also said that “It is clear from these figures that Brexit and the global Covid-19 pandemic have had a scarring effect on the mentality of many businesses, which are traumatised by the ongoing delays and disruptions to their supply chains,”
We all know that COVID had impacted us immensely. End of 2021 was not good either. Because of Omicron variant, the demand for goods and services was hit badly.
According to Centre for Economics and Business Research, UK businesses growth fell in the last quarter of 2021. According to their analysis, this has happened because firms struggled with the fallout caused by the latest wave of Covid-19 (omicron).
Another study was conducted by NatWest and their partners showcase that business activities had fallen in 11/12 regions in the UK. This severely affected the northeast. It has been also reported that London was also impacted because the loss of momentum has been clearly visible in the graphs.
Regardless of Brexit impact and Omicron causing issues, it has been made clear by MakeUK and PwC that the manufacturing companies will be doing good in 2022 first two quarters. Three quarters of the seniors executives from different companies voted in the survey.
Not just that, but 73% believe that opportunities outweighed the risks. So there is a possibility that in 2022 we will be looking at a decent turnover for our economy compared to our current condition.
Deloitte conducted a separate survey with the CFO’s of the large companies and found out that more than 37% of the firms are planning to invest more capital in the coming year. This is because they see demand increasing and supply might be reduced. And in order to handle this situation, this might become the best opportunity for them.
They will be investing in new products and services, which tends to send a signal that nothing like this has been done since from last 2000.
MakeUK survey also showed that 2/3rd of the organisations feel that the UK is a health competitive market for manufacturing industry at the moment.
MakeUK said that:
Possible death of the just-in-time supply chain business model”. “[That] may be a good thing for British manufacturers, who are now developing ways to ensure they are more resilient and less exposed to unforeseen international risks in future.
One thing I know for sure, that for the next few months we will be seeing quite a lot of increase in costs for goods we consume.
And that might make some people sad, but just hold on. One day everything will be sunny and brilliant again.
What are your thoughts on increasing costs, please do let me know in comments.