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Brexit causing supply problems for small UK manufacturers: survey

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New post-Brexit trade restrictions have pushed up the cost of parts and raw materials for two thirds of small British manufacturers surveyed last month, and a majority reported some level of disruption, writes David Milliken.

The survey of nearly 300 firms, by consultants South West Manufacturing Advisory Service (SWMAS) and the Manufacturing Growth Programme, a government and European Union-funded initiative providing support to small firms, adds to the picture of disruption from new customs checks that came into force on Jan. 1 for goods trade with the EU.

“Price hikes in the supply chain have been immediate, and we are hearing tales of lead times being extended on raw materials,” said Nick Golding, managing director of SWMAS.

Some 65% of manufacturers reported higher costs, and 54% said they had greater difficulties exporting goods to the EU.

Around a fifth of manufacturers thought they might gain from customers bringing work back to Britain from the EU.

Britain’s government has said many of the difficulties are “teething troubles” and last week said it would make 20 million pounds ($27.7 million) available to help small firms get used to the new rules. Further restrictions are due to take effect later this year.

Earlier this month the Bank of England forecast that Brexit-related trade disruption would reduce economic output by 1% during the current quarter - equivalent to about £5 billion - and it expects trade to fall by 10% in the long term.

Brexit supporters say Britain will gain long-term advantages by setting its own trade rules with countries outside Europe, as well as from greater control over domestic regulation.

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Ex-EU Brexit negotiator Barnier: UK reputation at stake in Brexit row

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Head of the Task Force for Relations with the UK, Michel Barnier attendsthe debate on EU-UK trade and cooperation agreement during the second day of a plenary session at the European Parliament in Brussels, Belgium April 27, 2021. Olivier Hoslet/Pool via REUTERS

Michel Barnier, the European Union's former Brexit negotiator, said on Monday (14 June) that the reputation of the United Kingdom was at stake regarding tensions over Brexit.

EU politicians have accused British Prime Minister Boris Johnson of not respecting engagements made regarding Brexit. Growing tensions between Britain and the EU threatened to overshadow the Group of Seven summit on Sunday, with London accusing France of "offensive" remarks that Northern Ireland was not part of the UK. Read more

"The United Kingdom needs to pay attention to its reputation," Barnier told France Info radio. "I want Mr Johnson to respect his signature," he added.

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Germany’s Merkel urges pragmatic approach to Northern Ireland

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German Chancellor Angela Merkel (pictured) called on Saturday for a “pragmatic solution” to disagreements over part of the Brexit deal that covers border issues with Northern Ireland, Reuters Read more.

Prime Minister Boris Johnson said Britain will do "whatever it takes" to protect its territorial integrity in a trade dispute with the European Union, threatening emergency measures if no solution was found.

The EU has to defend its common market, Merkel said, but on technical questions there could be a way forward in the dispute, she told a news conference during a Group of Seven leaders' summit.

"I have said that I favour a pragmatic solution for contractual agreements, because a cordial relationship is of utmost significance for Britain and the European Union," she said.

Referring to a conversation she had with U.S. President Joe Biden about geopolitical issues, Merkel said they agreed that Ukraine must continue to remain a transit country for Russian natural gas once Moscow completes the controversial Nord Stream 2 gas pipeline under the Baltic Sea.

The $11 billion pipeline will carry gas to Germany directly, something Washington fears could undermine Ukraine and increase Russia's influence over Europe.

Biden and Merkel are due to meet in Washington on July 15, and the strain on bilateral ties caused by the project will be on the agenda.

The G7 sought on Saturday to counter China's growing influence by offering developing nations an infrastructure plan that would rival President Xi Jinping's multi-trillion-dollar Belt and Road initiative. L5N2NU045

Asked about the plan, Merkel said the G7 was not yet ready to specify how much financing could be made available.

“Our financing instruments often are not as quickly available as developing countries need them,” she said

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Macron offers UK's Johnson 'Le reset' if he keeps his Brexit word

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French President Emmanuel Macron offered on Saturday (12 June) to reset relations with Britain as long as Prime Minister Boris Johnson stands by the Brexit divorce deal he signed with the European Union, writes Michel Rose.

Since Britain completed its exit from the EU late last year, relations with the bloc and particularly France have soured, with Macron becoming the most vocal critic of London's refusal to honour the terms of part of its Brexit deal.

At a meeting at the Group of Seven rich nations in southwestern England, Macron told Johnson the two countries had common interests, but that ties could improve only if Johnson kept his word on Brexit, a source said.

"The president told Boris Johnson there needed to be a reset of the Franco-British relationship," the source, who spoke on condition of anonymity, said.

"This can happen provided that he keeps his word with the Europeans," the source said, adding that Macron spoke in English to Johnson.

The Elysee Palace said that France and Britain shared a common vision and common interests on many global issues and "a shared approach to transatlantic policy".

Johnson will meet German Chancellor Angela Merkel later on Saturday, where she could also raise the dispute over a part of the EU divorce deal that is called the Northern Ireland Protocol.

The British leader, who is hosting the G7 meeting, wants the summit to focus on global issues, but has stood his ground on trade with Northern Ireland, calling on the EU to be more flexible in its approach to easing trade to the province from Britain.

The protocol aims to keep the province, which borders EU member Ireland, in both the United Kingdom's customs territory and the EU's single market. But London says the protocol is unsustainable in its current form because of the disruption it has caused to supplies of everyday goods to Northern Ireland.

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