Airbus joins CBI in warning of ‘devastating’ impact of ‘no deal’ Brexit on South West’s economy

January 22, 2019

Leaving the EU without a deal would be ‘devastating’ for the South West’s economy, hitting the region’s output by a staggering £13bn a year, the CBI said today.

It teamed up with aerospace giant Airbus, which employs around 4,000 people in its UK wing design centre at Filton, to deliver the warning. Airbus repeated fears it voiced last year that such a move would jeopardise the plant’s future by hitting its supply chain and adding to its costs. That could in turn stop any future investment in the factory by Airbus’s European owners.

As Prime Minister Theresa May continues to refuse to rule out a ‘no deal’ Brexit if her deal is not approved by Parliament, business groups have begun to ratchet up their opposition to the move with dire predictions of its likely economic impact.

Last week Business West, the South West’s largest business group and the organisation behind Bath Chamber of Commerce, said the region’s firms faced “the unwelcome prospect of a messy and disorderly exit from the EU on March 29”. 

Its managing director Phil Smith added: “There are no more words to describe the frustration, impatience, and growing anger amongst business.”

Following Mrs May’s appearance in the Commons yesterday when she again said ‘no deal’ remained on the table, the CBI today revealed the results of a new study it had commissioned on the economic impact of a ‘no deal’ scenario.

The findings, based on fresh analysis of the government’s own figures, showed a “devasting” long-term economic impact across the UK, with the South West likely to be among the regions most exposed to the fallout with an estimated annual loss of output worth £13bn by 2034.

Such a significant shortfall – which is based on a 7.6% fall in economic output – would hit people’s jobs, livelihoods and living standards, the CBI said, pointing out that this figure is more than the annual public spending on education in the South West, including all schools and colleges.

Manufacturing activity, which is particularly important to the South West, would be hit, with the aerospace and maritime sectors, which employ thousands across the region, likely to be severely impacted as they are particularly exposed to the risk of higher tariffs and trade costs, the CBI warned.

And with 45% of the South West’s goods exports going to the EU, any increased trade friction would add costs or delays and hit the region particularly hard.

CBI South West regional director Deborah Fraser said: “CBI members across the region are clear. If the new approach to finding a Brexit deal continues to be a game of who blinks first, the South West economy will pay the price.

“The deadlock will only be broken by a genuine attempt by all MPs to find consensus and compromise, not stick to rusting red lines and political conditions. Like the rest of the UK, the South West is not – and cannot be – ready for no deal.

“The projected impact on our region’s economy would be devastating and while business will do all it can to reduce some of the worst aspects, a no deal scenario is unmanageable.

“The message from the CBI to our politicians is clear – we must see compromise or the whole country faces the unforgivable prospect of a disorderly Brexit which will affect jobs and livelihoods in the South West for decades to come.

“It’s time to put our region’s prosperity before party politics and dogma.”

Airbus senior vice president Katherine Bennett added: “A ‘no deal’ scenario threatens Airbus’ future presence in the United Kingdom. While a ‘no deal’ scenario may not see the reconsideration of investments happen overnight, future investments would without doubt be at stake.

“Airbus’ integrated supply chain operates on a just-in-time basis that requires frictionless cross-Channel trade, meaning sudden changes in customs procedures, logistics and environmental standards would have major industrial and cost impacts.

“This would severely undermine the UK’s efforts to keep a competitive and innovative aerospace industry. As a direct employer of over 14,000 people in the UK, and an indirect supporter of 100,000 jobs through the supply chain, Airbus cannot sit by as the threat of a ‘no deal’ Brexit becomes a reality.”

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