New Brexit leak reveals costs for UK industries

The forecast impact of Brexit on every industrial sector of the economy reveals the estimated added costs to UK companies.

So-called non-tariff barriers as a result of leaving the EU have also been calculated to add as much as 16% in costs in the food, drink, defence and education sectors.

The estimates are from the same document as an earlier leak of the forecast economic impact on the UK’s nations and regions.

New Brexit leak reveals costs for UK industries
New Brexit leak reveals costs for UK industries

The analysis has been prepared by Government economists for Cabinet ministers, ahead of their discussions on future trading relationships with the EU, to be held on Thursday.

The estimated impact of Brexit on the UK’s industrial sectors are what drive the eye-watering hits to growth over the next decade-and-a-half that have been forecast in certain parts of the country.

They are calculated from the estimated effect of non-tariff barrier costs on British businesses, which will be introduced to UK-EU trade upon withdrawal from the bloc.

Those costs have been expressed in percentage terms as if they were a regular tariff on trade.

Oxford Street, London
Image:Britain’s retail sector could be hit by a 20% rise in costs outside the EU

The non-tariff barriers include extra customs checks, rules of origin regulations, added paperwork, and diverging regulatory standards.

Essentially, they are a calculation of the ‘friction’ that will be introduced to trade across almost all UK industrial sectors.

The Government no longer promises that post-Brexit trade with the EU – the UK’s biggest market – will be frictionless after Brexit, instead claiming it will be “as frictionless as possible”.

The document, circulated to members of the key Cabinet sub-committee due to meet on Thursday, estimates the range of potential non-tariff costs in key industrial sectors.

Tariff equivalent of non-tariff barrier costs, by sector:

:: Machinery, equipment and energy: 2% to 6%

:: Chemical, rubber and plastic: 6% to 12%

:: Other manufacturing: 5% to 12%

:: Motor vehicles: 5% to 13%

:: Food and drink: 8% to 16%

:: Agriculture: 8% to 17%

:: Construction: 0%

:: Business services: 0% to 6%

:: Other services: 2% to 10%

:: Financial services: 5% to 10%

:: Defence, education and health: 6% to 16%

:: Retail and wholesale: 7% to 20%

Video:Report warns of 16% GDP hit to the North in event of no Brexit deal

Agriculture could be hit by extra costs of between eight and 17%, although that could be mitigated by changing regulations and free-trade deals with new markets.

In response to the leaked analysis, a Government spokesperson said: “This document does not represent Government policy and does not consider the outcome we are seeking in the negotiations.

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“As ministers clearly set out in the House of Commons, this is provisional internal analysis, part of a broad ongoing programme of analysis, and further work is in progress.

“We are seeking an unprecedented, comprehensive and ambitious economic partnership – one that works for all parts of the UK. We are not expecting a no-deal scenario.”

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