UK chancellor of the exchequer Philip Hammond, the country’s finance minister, says that the UK chemical industry would be one of the worst hit by a no-deal Brexit.
The UK government defines no-deal Brexit as a scenario in which the United Kingdom leaves the European Union in March 2019 without a withdrawal agreement and no framework in place for a future relationship. The United Kingdom and European Union would trade with each other under World Trade Organization (WTO) rules in these circumstances.
In a letter to Nicky Morgan, a member of the UK parliament’s treasury committee, Hammond says, “Under a no-deal/WTO scenario chemicals, food and drink, clothing, manufacturing, cars, and retail are estimated to be the sectors most affected negatively in the long run, with the largest negative impacts felt in the northeast and Northern Ireland.”
The estimates are based on a provisional UK government analysis of Brexit that was made in January 2018. The analysis also says that, under a no-deal/WTO scenario, UK GDP will be 5.0–10.3% lower than it otherwise would have been, 15 years after the country exits the European Union. UK government borrowing will be £80 billion/year ($103.2 billion) higher by 2033–34 under a no-deal/WTO scenario, according to the analysis.
The northeast of England, singled out by Hammond as one of the most vulnerable UK regions, includes the giant Teesside chemical complex, which comprises sites such as Billingham, North Tees, Seal Sands, and Wilton.
UK Brexit secretary Dominic Raab started on Thursday to publish a series of technical notices offering guidance for UK businesses on what actions to take under a no-deal Brexit. He also outlined the UK government’s preparations for a no-deal scenario.
The UK chemical industry has welcomed the guidance. “While we continue to urge both parties to secure a future deal that minimizes disruption for all European chemical businesses, it is reassuring to see the UK government addressing the consequences of a no-deal Brexit and the actions that our sector might need to consider,” says Chemical Industries Association (CIA; London) chief executive Steve Elliott.
CIA expects the UK government to issue technical notices more specific to the chemical industry in early September, addressing chemicals regulation, environmental standards, energy, and export-control regulation. “All of these will help inform work that CIA is currently conducting on scenarios and contingencies around a number of options, including the impact of a no-deal,” Elliott says.
The UK chemical and pharmaceutical industry has sales of £50 billion/year, CIA says. About 60% of its exports go to the European Union and 75% of its imports and raw materials come from the European Union, according to CIA.
By Ian Young
Source: Chemical Week
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