by Business leaders say frayed ties with the EU are costing the UK economy as suppliers in the bloc become more cautious about doing business with Britain post-Brexit.
To increase pressure on Rishi Sunak’s government as bosses warn the UK is falling behind its rivals, manufacturers’ group Make UK has called for an urgent reshuffle of political and trade relations with the EU.
The trade body said nearly half of UK manufacturers in a survey of more than 100 leading industrial companies said their EU suppliers had become more cautious about doing business in the UK.
It also said a strained post-Brexit relationship could have a damaging impact on trade relations elsewhere in the world, as there are signs companies from countries further afield have also become more cautious about making supplies to the UK.
Speaking at the national manufacturing conference in London on Tuesday, Make UK chief executive Stephen Phipson will argue that the report underscores the need to forge closer ties with the EU post-Brexit.
He is urging the government to make further progress after the Windsor Framework deal on post-Brexit trade in Northern Ireland and will say: “We must strengthen our political and trade relations with the EU, which are marked by such resentment redesign.
“I would like to applaud the Prime Minister’s positive approach, showing what can be achieved by working pragmatically and collaboratively rather than banging the table or making threats. Hopefully the agreement reached last week will be the start of a new chapter.”
Earlier this year, Make UK said more than 40% of manufacturers felt last year’s political chaos had damaged the UK’s image as a destination for foreign direct investment.
With growing caution among international peers about doing business in the UK, the latest industrial sector health check showed many companies are looking to suppliers closer to home and are diversifying their supply chains amid concerns about political instability.
Almost a fifth of manufacturers said they had reduced the number of EU suppliers in the last 12 months. However, the report showed that the UK’s image was being tarnished and trade relations were not limited to partners in the EU, with 35% of companies agreeing that suppliers from the rest of the world were also wary of the UK.
US bank Citigroup announced on Monday that it plans to double its Paris workforce by building a new trading floor in the French capital, part of a gradual shift of global lenders away from London after decades of using the UK as a hub have EU business.
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Fabio Lisaanti, the bank’s head of trading in Europe ex-UK, told Bloomberg News that London will remain its main base in the region but that more staff will be moved to Paris.
“We’ve already moved quite a bit and there’s still more to do,” he said. “We were able to hire talent in Paris that we could never have attracted in London.”
A spokesman for the Department for Business and Trade said: “A recent survey of global CEOs found the UK ranked third for investment, showing that our low-tax, high-skill economy remains very attractive to business leaders around the world.
“The government is making large investments in growth sectors like advanced manufacturing and life sciences, and continues to support businesses by reducing energy costs for our most energy-intensive industries.”
