The scene is set for a showdown, and the future of the UK economy is at stake. Will Britain secure a free trade deal with the EU? Or will the prime minister choose to sail into uncharted waters, not only stepping outside the single market and customs union, as the UK will be even under a deal, but adding the tariffs and border checks that come with a no-deal Brexit?
Armed with a determination to end the transition period on 31 December, Boris Johnson is poised to force British businesses to sell their goods and services across the EU without any of the benefits that a deal offers, and with only a few days’ notice. Here we assess the impact on some of the worst-hit industries of securing a deal – albeit a slimmed-down one – compared with the alternative.
Deal The manufacturing sector is praying for a deal so it can avoid the extra paperwork and tariffs that would follow the UK’s departure without an agreement. Car parts and aircraft components cross the Channel many times before they are assembled to become the finished article. An agreement would eliminate import taxes, or tariffs, and allow firms to maintain their current supply chains.
No deal Nissan is among many manufacturers to say that they have “no plan B” should the UK become separated from the EU’s single market. The car industry expects prices to rise for consumers once 10% tariffs are imposed. Over the longer term, being cut off from manufacturers based in the EU will limit investment in the UK, especially in new industries such as electric cars. Co-operation across Europe in the aerospace industry, which has fed off the Airbus plants spread across the UK, Germany, France and Spain, is also likely to be damaged.
Deal The UK will no longer align with EU regulations on medicines, whether there is a deal or not. Pharmaceuticals companies such as AstraZeneca and GlaxoSmithKline have prepared for this by setting up parallel batch-testing labs on the continent, but this will delay the supply of medicines by four to six weeks, the Association of the British Pharmaceutical Industry has warned. It is pushing for a mutual recognition agreement, which means the UK and the EU recognise each other’s standards, removing the need for duplicate testing. The UK has such agreements with several countries and they are often signed outside trade deals. New medicines will still have to be approved by separate regulators in the UK and the EU.
No deal Drugmakers have been boosting their stockpiles of medicines to ensure there are no shortages, and are storing them closer to patients in the UK and Europe. Under World Trade Organization rules, there will be no tariffs on medicines, but like other goods they will be subject to border checks. The government wrote to medicine suppliers in August to warn of “significant disruption” for six months between Dover and Calais, but pharma firms plan to use alternative routes to transport…
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