Brexit will hit aerospace and automotive the hardest, says report

​High- and medium-tech manufacturing are at risk of a ‘significant decline’ after Brexit, according to a report from the UK Trade Policy Observatory.

The report analysed 122 sectors and found that aerospace, automotive and pharmaceutical makers would be worst affected by trade with the European Union becoming more difficult once the UK leaves.

If the UK leaves the EU with no deal, the report predicts that the automotive sector could shrink by 10.4%, with the aerospace industry in line for an 8.1% drop.

The report identifies three regions most at risk of manufacturing job losses as Fylde, Stratford-upon-Avon and Leicester, where there are a large number of aircraft manufacturers, automotive manufacturers and clothes makers respectively. In Stratford-upon-Avon, it predicts that 1,500 high-tech manufacturing jobs could be lost per 100,000 residents.

“None of the five Brexit scenarios that we model leads to a positive outcome for UK manufacturing on average,” say the authors. “Even EEA membership results in higher costs of trade between the UK and the EU, and with reduced market access in comparison to that currently enjoyed as a full member of the EU. These higher costs will harm UK manufacturing.”

According to Michael Gasiorek, one of the authors, even a robust industrial strategy would not offset the fall in manufacturing. “Brexit will have very complex impacts on industries, ranging from impacting on imports and exports both because of possible tariff barriers and also complex non-tariff barriers (such as mutual recognition of testing and certification – ie proving that you produce to the right standards), impacting also supply chains both in terms of manufacturing and service inputs,” he told Wired. “That is not something that industrial strategy could easily counteract.”

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