Thread by @BenChu_

How are UK manufacturing exporters coping with Brexit?

🪛📦🏭🧑‍🏭🚚🇬🇧🇪🇺

A thread...

....We had the bullish case from one of the UK’s most famous manufacturing entrepreneurs, Sir James Dyson, this week.

"We've got our freedom...“ he told the BBC...2/

bbc.co.uk/news/business-…

...And the official trade figures do suggest a reasonably strong bounce back of exports in overall manufacturing exports in February after the plunge in January.

So is all well? In a word: no....3/

ons.gov.uk/economy/nation…

...Stephen Phipson of @MakeUK_ told me that there’s been a "twin track" experience for manufacturing exporters.

Larger firms have been able to get their product to Europe, albeit at a major additional cost and difficulty.

But many smaller firms have hit a brick wall...4/

...SuperFOIL in Lincoln was making £20,000 of sales a week to EU customers before January.

It’s been ZERO since then, its managing director Will Bown tells me, because of new red tape...5/

...The Cheshire Cheese Company was making direct sales of £180,000 a year to EU customers before January.

It’s been ZERO since then because of new health-related export red tape, managing director Simon Spurrell tells me...6/

...& he simply can't see how they will start up again.

Surveys suggest this is not uncommon.

A survey in March from the @The_IoD showed a tenth of its members who previously traded with the EU had now stopped doing so permanently...7/

iod.com/news/news/arti…

...One in 20 exporters surveyed by the Federation of Small Businesses @fsb_policy last month also said they’d decided to simply stop trying to sell to the bloc, with one in ten considering giving up....8/

.fsb.org.uk/resources-page…

...But Boris Johnson has suggested that these are merely "teething problems", which will be overcome with time...9/
reuters.com/article/us-bri…

...To some extent this might be true.

Mr Bown of SuperFOIL hopes to get sales back to pre-Brexit levels within a couple of years.

Yet, crucially, he says, without Brexit, he would have expected sales to be FOUR TIMES that level by that date given previous growth rates...10/

...Church’s Shoes in Nottingham, which sends 60% of its product to the EU, has managed to get its exports through, despite the thicket of new red tape which has pushed up costs...11/

...A Brexit export success on the face of it.

But its CFO warns the new need for its EU customers to pay VAT upfront on imports may induce some with cashflow stresses to source from within the EU rather than the UK...12/

...In other words, its FOREGONE future EU sales, rather than a dip in 2020 levels, due to permanent new bureaucratic barriers that's perhaps the biggest threat to some exporters.

This point risks being lost as we pore over changes in the levels of exports since December...13/

...The Brexit modelling, including the gov’s 2018 report, shows the long-term economic damage from Brexit to manufacturing comes from lower EU trade growth than OTHERWISE WOULD HAVE TAKEN PLACE, not from a drop in trade relative to previously...14/

assets.publishing.service.gov.uk/government/upl…

...so it's vital to keep this economic counterfactual in mind when people make competing claims about the impact of Brexit on manufacturing based on looking at export levels...15/

(...Also keep in mind, as Mr Phipson of @MakeUK_ stresses, the UK has not yet introduced new import checks & the new UK regime for chemicals regulation and product conformity assessments also haven’t kicked in yet.

“We’re just at the beginning of this,” he warns...)16/

More here for @indypremium 👇

ENDS

independent.co.uk/independentpre…