James Cartlidge, MP for South Suffolk, has unveiled some of the key responses he has received in approaching local firms and farms for their views on the potential impact of a ‘no deal’ Brexit. All contributors, other than trade organisations, have been treated confidentially.
Speaking about the responses, James said:
“I am very conscious of the fact that at times the coverage of the potential impact of a Brexit ‘no deal’ scenario has verged on the hysterical, e.g. with the suggestion that the Queen would be relocated from London. Given feelings are running so high, I have therefore sought an objective view of how local businesses feel and it has to be emphasised that feedback varies considerably. Some businesses are positive about the prospect of no deal, others extremely worried, but the one thing there is agreement on is that the best outcome would be for Parliament to pass a deal so that we can finally move on to the next stage”.
The following are all from well-known South Suffolk businesses and provide a representative cross-section of major players in local industry, with the proportion of negative/positive responses reflected in the extracts:
Positive:
- A leading manufacturing business in the constituency, who exports around the world, is bullish about UK prospects even in a ‘no deal’ scenario and has assured its staff recruitment will not be affected in any outcome
- Another leading manufacturer who also exports to global markets would prefer a deal but believes it’s important to use business logic and ‘be able to walk away from the negotiating table’
- A service-based business is similarly upbeat and sees only minor issues arising from a ‘no deal’, and would simply be likely to focus its recruitment outside the EU in the event of ‘no deal’
Negative:
- One major manufacturer - long established in the constituency, who primarily exports to the EU – faces a potentially existential threat from default WTO tariffs which would apply to their products and be likely to exceed operating margins
- Another leading manufacturer and international business would be likely to confine their business to domestic production, potentially ending the large volume of exports they currently sell into the EU from South Suffolk
- Another well-known manufacturing business has warned of the high cost they could face from new licenses and labelling rules, describing no deal as a ‘catastrophe’, particularly for the delays they believe it would cause resulting from new checks on goods
- Another international corporation, exporting from the constituency, has warned that the effect of no deal on ‘the wider economy and our customers would be extremely negative’
- Many companies referred to the general ‘uncertainty’ of no deal, with the example of a firm established for generations in South Suffolk whose EU exports are threatened by a lack of certification for their products, and no certainty at all as to when certification would be forthcoming without a deal.
- Meanwhile the East Anglian NFU have discovered that no grain export shipments are currently booked from Ipswich after March 29th, Brexit day, due to uncertainty of what tariffs would apply. Under WTO rules, the default tariff on wheat is 95EUROS compared to current prices of £160/t for feed wheat and £180/t for milling and barley, making any exports completely uncompetitive. Whilst this produce could be diverted domestically, tariffs on imports are likely to be slashed to avoid inflation, and the high tariffs on exported livestock could lead to culls and therefore reduced demand for domestic feed wheat.
James concludes:
“Inevitably, those firms most exposed both to the EU market and to WTO tariffs and non-tariff barriers (e.g. new labelling rules), are more concerned about the potential impact of a no deal Brexit. In some cases, the firms in question are extremely worried but have kept quiet publicly to avoid worrying their staff, which is understandable. However, it is absolutely not all doom and gloom, and there are plenty of businesses more positive about no deal.
“Overall, there is no doubt that the one outcome every business can agree they want to see is Parliament voting through a deal. In my view, this would not only lift current uncertainty, but see a bounce back in optimism and growth, giving us the ideal platform for us to leave in an orderly manner with our economy firing on all cylinders”.
