The chemical industry in the United Kingdom and rest of Europe faces a prolonged period of uncertainty after the UK public voted in a referendum yesterday to leave the European Union.
The result has triggered the resignation of UK prime minister David Cameron, who campaigned for the United Kingdom to stay in the European Union. A British exit from the European Union, commonly known as Brexit, has major implications for the chemical sector across Europe.
The chemical and pharmaceutical sector, the United Kingdom’s biggest manufacturing exporter with overseas sales of about £50 billion/year, expressed earlier its almost unanimous support for the country to remain a part of the European Union. However, the industry has today expressed confidence that it can weather any subsequent volatility and uncertainty. “It is not the decision that our sector wanted, but we fully respect the wish of the people for change,” says Steve Elliott, chief executive of the Chemical Industries Association (CIA; London). “While business craves certainty, it is also used to operating in challenging and changing circumstances; this is what companies and their representative bodies do wherever they operate. We now have to look at the future and I am confident that an important and resilient industry such as ours can prosper in this new situation.”
Elliott has called on the UK government to “work hard on securing the best exit plan for the UK and then establishing the new trading arrangements” with the European Union. “While we need to progress both these negotiations as soon as we can to limit uncertainty, we also need an immediate period of calm reflection to minimize instability,” Elliott says. “As an association we will do everything we can to help our members through any period of uncertainty and to be influential in the government’s negotiations, both here in the UK and with our partners in Brussels.”
UK leaders, including Cameron—who will step down as prime minister by October 2016—and other top figures in the Conservative Party, among them many who supported Brexit, have called on the United Kingdom to make a careful exit from the European Union, to minimize uncertainty and volatility. The country has two years to complete its exit, after officially notifying the European Union of its intention to do so, and will remain an EU member state in the interim.
The chemical and pharma industry adds £15 billion/year of value to the UK economy, about 10% of the value added by the whole of UK manufacturing, CIA says. It also employs about 140,000 people directly and supports in total about 500,000 jobs in the United Kingdom.
The chemical industry in the rest of Europe had also supported the United Kingdom’s continued membership of the European Union. “Despite this, we fully respect the outcome of the referendum,” Cefic says in a statement.
The United Kingdom accounts for about 9% of the European Union’s €531-billion/year chemical sales and the rest of the European Union has on average a €2-billion/year chemical trade surplus with the United Kingdom, Cefic says. Chemical exports from the rest of the European Union to the United Kingdom totaled €22.3 billion and chemical exports from the United Kingdom to the rest of the European Union totaled €20.3 billion in 2014, the latest year for which figures are available, Cefic says. Petrochemicals are the highest-volume chemical export from the European Union to the United Kingdom, accounting for 28% of total EU-UK chemical exports in 2014.
“Given this importance for Europe we need to work closely to ensure that existing trade and investment is not weakened and future opportunities are seized,” Cefic says. “As the implications of the referendum unfold more concretely, we look to the respective governments, parliaments of the United Kingdom, and EU member states to work hard with the European Commission on securing the right framework for establishing new arrangements so our economies can continue to grow.”
Germany’s chemical industry, Europe’s largest, has been more forthright in expressing its anxiety about Brexit. Industry association VCI (Frankfurt) says it expects “severe economic and political damage” following the UK referendum. “The German chemical industry has always been committed to the political and economic unity of the European Union,” says Marijn Dekkers, president of VCI. “For this reason, I very much deplore that the British voters decided yesterday to leave the EU. Especially now, at a time of timid economic recovery in Europe, their leaving the European Union is a negative signal for further economic development. Less economic growth in the EU member states and weaker export business will be the consequences. But the political damage weighs just as heavily.”
By Ian Young
Source: Chemical Week
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