‘A 17-20% Drop in Contracts’ – The Brexit Exodus has Already Begun

British manufacturing is already suffering as Boris Johnson gambles on a ‘no deal’ crash out of the European Union.

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A powerful UK manufacturing lobby has said that just 10% of manufacturers now support a ‘no deal’ Brexit as they see a significant fall-off in orders and contracts not only with European customers but elsewhere in the world.

Make UK represents 20,000 companies in manufacturing, a sector doing about £275 billion in trade.

Its CEO, Steve Phipson, raised the alarm with MPs last week about a decline in contracts and orders with foreign companies of 17-20%.

A hard no deal is a disaster. We cannot see anything there that is positive about it for this sector.

Steve Phipson, CEO of Make UK

“We have seen a significant fall-off in the last three months of orders coming from Europe, but we have also seen a significant fall-off from the third countries as well, so around 17% at the moment,” Mr Phipson warned. 

“If you could extrapolate and think about that, we are seeing something like a 20% run rate in decline of new contracts and orders coming in.”

In business, a ‘run-rate’ typically refers to when one-quarter of sales is extrapolated to determine what it would mean if the same performance was sustained for a whole year.

Mr Phipson said: “We have been out there talking to hundreds of these businesses to understand what those customers are saying, and it is quite clear. They are just saying, ‘it is risk. We will delay’.”

He agreed with Labour MP Owen Smith that the 17%+ decline in the past three months has been due to “people anticipating that it is going to be more difficult in future to do business with us and therefore looking for supply from elsewhere”.

“A hard no deal is a disaster. We cannot see anything there that is positive about it for this sector,” Mr Phipson told MPs, adding that approximately 66% of his members would rather see Article 50 revoked than a ‘no deal’ Brexit.

Too many companies still have no idea what a ‘no deal’ Brexit will mean for them, Mr Phipson added: “Travelling around and talking to many of the smaller manufacturers that export in this country, a lot of them are not even aware that they are exporting under a European FTA [free trade agreement], so it is about messaging, it is about clarity in the advice.”

MP Angus MacNeil, chair of Parliament’s International Trade Committee, said of Mr Phipson’s warnings: “We were left in no doubt that a more proactive approach to informing businesses about the potential changes to the terms on which they trade is urgently required.

“With no deal becoming an increasingly likely prospect, it is essential that businesses trading internationally are properly prepared for what may be to come.”

Responding to the industry’s call for help, Mr MacNeil has written to the Trade Secretary Liz Truss, urging her to update guidance to companies on a ‘no deal’ Brexit.