Brexit analysis predicts chemical industry contraction

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Brexit analysis predicts chemical industry contraction

26 March 2018

‘A UK government economic analysis of the impact of leaving the EU indicates that chemicals will be the industry hit hardest by Brexit. The cross-Whitehall briefing, originally produced in January 2018, explores three trade scenarios, each with overall adverse effects on UK–Europe trade that are greater than any trade benefits gained elsewhere.’

‘The analysis ranks the pharmaceutical and chemical industries as the first and third most dependent in the UK on trade with the EU, respectively. Consequently in the worst ‘no deal’ scenario, the gross value added (GVA) – a figure that reflects production within a country – from chemicals falls by 16%, compared with current levels. Even the best case scenario sees a 3% decline. While the analysis does not model the pharmaceutical industry specifically, GVA for ‘other manufacturing’ declines 8% in the worst case trade scenario and 1% in the best case.’

‘The previously ‘secret’ economic analysis document has been released following a judicial review brought by the Good Law Project and Green Party MEP Molly Scott Cato. The first scenario includes a high level of access to EU markets, following the model of the European Economic Area (EEA) covering Iceland, Liechtenstein, and Norway. This scenario would see the least financial impact. However, because it needs UK agreement to continued labour mobility, the government has already ruled it out.’

‘The second scenario is a free-trade agreement (FTA), similar to that recently agreed between Canada and the EU. The final scenario is where the UK and EU fail to reach a deal, and fall back on World Trade Organization (WTO) rules. Based on Theresa May’s comments in a speech in Florence, Italy, in October 2017, the UK is hoping for a bespoke trade deal somewhere between the EEA and FTA scenarios.’