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A hard Brexit will cause a £17 billion fall in UK manufacturing exports every year, lawyers warn today in one of the legal profession’s gloomiest forecasts yet of the ramifications of leaving the EU.
Crashing out of the bloc without a beneficial trade deal in place is most likely to hit Britain’s car, technology, healthcare and consumer goods sectors, according to a report from the London office of Baker McKenzie, a global law firm based in the US.
The report says that a so-called hard Brexit, in which the country reverts to World Trade Organisation arrangements for trading with the remaining EU countries, will result in a £17 billion fall in annual EU export revenues across key areas of British manufacturing.
The firm, which commissioned the report from the consultancy Oxford Economics, predicts that UK exports will suffer at least four times more than key EU manufacturing exports as a result of Brexit.
Britain’s automotive sector is likely to be the hardest hit, with a fall of nearly £8 billion in export revenues every year, the report says. It also predicts a £5.2 billion loss for consumer goods exports.
“The combination of rising prices and softening margins could result in significant trade deficits,” Sunny Mann, a partner at Baker McKenzie, said. “We are working with many clients to consider if and where they can alter supply chains to reduce their reliance on the EU.”
Brexiteers have argued that Brussels will be compelled to cut a beneficial trade because of the large amount that the EU countries export to the UK, particularly in the automotive sector.
However, Ross Denton, another Baker McKenzie partner, said while this may be true in numerical terms, “when you look at this as a percentage of their trade, you can clearly see that the EU exports a lot more broadly, to a whole host of other markets, and consequently it is far less dependent on the UK as a market than the UK is on it”.