Opinion: What does the Election Result mean for Manufacturing in the UK?
By Nick Behan
Director, Norman Broadbent Interim Management
When Theresa May called for a snap election on the 18th April everything suggested an easy win for the Conservative that would strengthen her hand when it came to Brexit negotiations. However, If we’ve learnt anything from the past year of political surprises across the US and Europe this result might not have come as too much of a surprise to some of you.
So what does this all mean for manufacturing? Well firstly, in reality not a lot has changed since before the election, as the challenges we face following our decision to leave the European Union remain the same. However, with the EU being the region that our manufacturers trade with the most, the effect of a hung parliament could prove, not only to be a setback to our ability to negotiate, but one that could end up costing those who export their products to companies in the EU a significant increase in tariff and non-tariff costs. In a worse case this could lead to a reduction in trade with the EU should negotiations go badly, which would not only be bad for the sector but also for the wider GDP of the Country. And all this is assuming that we get the agreement from the 27 EU member countries needed to trade freely!
However, since the referendum last year, the UK’s manufacturing sector has fared fairly well and, surprisingly, manufacturers are currently experiencing their best period of growth since January 2014. This was aided by not only the weakening of the pound and strong domestic growth, but buoyant global markets that have led to an increase in new export business. All this resulted in the manufacturing PMI index jumping to an unexpected three year high in May.
As Ben Broadbent (Deputy Governor of Monetary Policy – The Bank of England) said in a recent speech, he gave at Imperial College, the fall in the pound since Brexit had created “something of a sweet spot for exporters and businesses that compete with imports”. In addition to this, companies still have the benefit of full access to the EU. However, he did warn that this was unlikely to bring any lasting benefits.
So, after all this, the big question is ‘how will Brexit actually look?’ The truth is we don’t actually know but what we can be certain of is it will come with a set of new challenges which will inevitably mean that manufacturing companies will need to drive innovation, efficiencies and ensure they’re fit for the new future. All of which are areas that an experienced interim manager could be the perfect solution to help manage, implement and drive the changes needed to ensure our manufacturing companies are in the best shape to take advantage of the new future.
Nick Behan Leads the Industrial Practice at Norman Broadbent Interim
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