The effects on industry part 3
Those of you who have been following this series will be aware that the last few parts have focused upon the effects industries may face in the event of a possible British exit from the European Union. Previously we have touched upon industry professional opinions and the effects it may have upon the beautiful game but what about the other industries? Today we will be looking at the potential problems faced by these industries in the event of a Brexit.
Let’s start by talking about Tariff, or the lack of. Currently the United Kingdom is part of the free trade agreement within the EU, a market made up of over 500 million people. In the event of leaving the European Union some industries could end up having to charge over 20% VAT on their products. The table below shows the potential barriers various sectors may face.
|Exported to the EU|
|Food, Beverages & Tobacco||60.5%||20%+ Tariff|
As the table above suggests the cost of a possible Brexit could be pretty high, particularly in the food, beverages and tobacco sector where the potential barrier is 20% and higher. Obviously this may cause a problem for the industries listed but as the table below shows the initial disruption will not last for ever.
|Sector||Risk of disruption||Chances of similar EU trade access|
|Chemicals||High||Medium to High|
|Food, Beverages & Tobacco||High||Medium to High|
As you can clearly see the initial impact of exiting the European Union will be quite substantial for all good sectors. That said the chances of exporting to the European Union in a similar fashion to the current agreement are very high. So why would we want to leave when there is a potential for such disruption? In the event of leaving the European Union, the goods sector will still be able to thrive while at the same time reinstating the decisive power of trade agreements to the United Kingdom. As shown by a number of countries currently involved in other trade agreements, there is a strong chance of benefiting from a different Trade Agreement.
Not only would we have a chance to replicate the successes of countries like Switzerland in our Trade agreements with the European Union but we would also open the possibility to bigger opportunities and trade agreements that were previously impossible. Examples of this are the possibilities of a trade agreement with China which benefit the UK Car industry and a trade agreement with India for the scotch whiskey industry that currently accounts for 25% of all UK food and drink exports. All in all, the actual outcome be it positive or negative, would ultimately be decided by the decisions made when striking these international deals.
What do you think? Should we try and strike up our own trade agreements or should we stick with what we know?
Tony & The Espace Team