UK Industry Leaders Urge New PM to Reset Trading Relationship With EU

By Alexander Zhang
Alexander Zhang
Alexander Zhang
July 18, 2022 Updated: July 18, 2022

UK industry leaders have called on the incoming prime minister to reset Britain’s trading relationships with the European Union, which remains the dominant market for British manufacturing exports.

In a report published on July 18, Make UK, a business group which represents British manufacturers, and business advisory firm BDO, said that the European market remains the overwhelmingly favoured destination for the UK’s manufacturing sector, with half of British manufacturing exports going to the EU last year.

The report also revealed that regions which voted for Brexit, including Wales, the northeast, and the East Midlands, have increased their dependence on the EU for manufacturing exports.

‘Main Destination’

Make UK said the new prime minister, who is set to replace Boris Johnson in Downing Street in early September, should take immediate steps to renew the trading relationship with the EU, as the 27-nation bloc remains “by some distance” the most important export destination for UK goods.

Verity Davidge, the group’s director of policy, said: “Despite the talk of ‘Global Britain,’ history shows that geography is always the main determinant of trade. The EU was always going to remain the main destination for manufacturers who appear to be becoming more, not less, dependent on it as a market.

“As a result, it is vital the government now takes steps to reset the trading relationship with the bloc and, wherever possible, eases and simplifies trading to boost exports for SMEs [small and medium-sized enterprises] in particular.”

Richard Austin of BDO said, “Manufacturing businesses have done a good job in adapting to new post-Brexit rules for trading with the EU, but ongoing government support may well be required, particularly for firms at the smaller end of the spectrum.”

Row over Northern Ireland

The UK is currently embroiled in a bitter dispute with the EU over the post-Brexit trade arrangements between mainland Britain and Northern Ireland, a UK province which shares a land border with the Republic of Ireland, an EU member state.

Johnson signed the Northern Ireland Protocol with the EU in 2019 as part of the Brexit withdrawal agreement, with the measures aimed at preventing a hard border on the island of Ireland.

But the protocol has been fiercely opposed by unionists in the British province, who complain that it effectively keeps Northern Ireland within the EU single market while erecting a border in the Irish Sea between the province and mainland Britain.

Last month, Johnson’s government unveiled plans to scrap parts of the protocol. In response, the EU launched legal action and slammed the UK for intending to “unilaterally break international law.”

PA Media contributed to this report.