UK aerospace calls for “refresh” on Brexit strategy

UK aerospace calls for “refresh” on Brexit strategy

UK aerospace calls for “refresh” on Brexit strategy

14 / 06 / 2017

Britain’s £32bn turnover aerospace industry, second in size only to the US, has called for a “refresh” of the UK government’s Brexit strategy as talks on terms for leaving the European Union (EU) begin in earnest next week.

The UK’s Aerospace Defence Security (ADS) trade organisation has also repeated “serious doubts” expressed to it by aerospace logistics suppliers that UK Customs’ computer system may be unable to cope with increased volumes in a ‘hard Brexit’.

Britain’s general election last week, which resulted in a minority government for Conservative Prime Minister Theresa May, has led some commentators to believe that a softer approach to Brexit ─ ruling out a return to World Trade Organization tariffs in May 2019 ─ may now be a better prospect.

The UK aerospace sector, supplying systems and sub-systems worth £8.5bn into Europe alone, employs 120,000 people directly.

ADS said that it is important that “all the potential options for a successful Brexit remain on the table”.

Such options include “access to the European single market, membership of the customs union, remaining within the European regulatory regimes and examining the controls on the freedom of movement”.

ADS chief executive Paul Everitt said: “The political context in the UK and elsewhere in Europe has changed. We now have a vital opportunity to refresh our approach, with a great focus on building consensus and a more constructive tone towards goals we share with our European partners.

“Last week, the country signalled that it wanted a more collaborative approach. The government needs to build a strong consensus on the priorities and options for a successful Brexit.”

On the “no deal is better than a bad deal” approach by Prime Minister May before the election, Everitt said: “No deal is the worst outcome for the UK and Europe. Finding the best agreement will require compromise and pragmatic decisions by the UK and its European partners.”

ADS is also pushing for a “smooth transition” out of the EU “rather than a cliff edge”, so that UK businesses and public sector organisations such as Customs are given reasonable time to adjust to changed

Everitt said that there would be a “reconfiguring of supply chains” over time and that aerospace logistics suppliers will analyse potential delays in parts and materials crossing borders that are currently frictionless, “to minimise the overall cost impact”.

He added: “Part of the challenge that we are facing as an industry is in understanding those flows of parts and materials. I spoke with one company, very high in the supply chain, with a sophisticated system that handles over 100,000 transactions during the course of the year. That example gives you some sense of scale.”

Everitt was asked specifically about logistics industry concerns that HM Revenue & Customs may have problems with its IT in handling a sudden surge in European declarations in a hard Brexit world.

He said: “This is not an area where we have had to be experts in, but we have done some work in this area, working with our colleagues in the freight transport and logistics industry.

“They have serious doubts as to whether the HMRC computer system has the capacity to manage the likely volume increase that we would see if there were not a successful Brexit deal.”

He added: “We have some conversations with logistics companies and they are better positioned than many because they deal not just with Europe but also with the rest of the world on a regular basis as well. They they have a good understanding of what it might require, but prefer not to go there.”

ADS said that there would not be immediate damage to the UK aerospace sector in the short to medium term, the industry’s current order book stretches ahead eight years.

ADS warned, however, that the danger lies further ahead as the UK misses out on “incremental investment decisions” in training, technology and new facilities, omissions that gradually weaken the sector’s competitiveness.