London, UK – The EU has agreed to delay the UK’s potential exit until the end of October, or sooner if parliamentary support is achieved. Although ‘no deal’ is most likely off the table, it is highly likely that the uncertainty will drag on, according to Steve Elliott, chief executive of the Chemical Industries Association (CIA).
‘[We have] a Conservative party that is extremely wary of a customs union as that goes against the grain of taking back control,’ he said. ‘But we also have a Labour leadership that doesn’t want to be dragged into committing to a second referendum.’
From the UK chemical industry’s point of view, Elliott said, regulatory certainty is essential. He cited murmurings among some member companies that the relative certainty around a ‘no deal’ exit might be better than drifting along for another six or nine months.
With no deal, he added, tariffs in the chemicals world would be 5.5 and 6.5%. ‘The vast majority of our sector could live with that,’ he said.
Delays at borders would be a far more significant problem. ‘60% of our exports head to the EU27, and up to 70% of our imports come from the EU27,’ he said. ‘Any disruption around our increasingly just-in-time operations will be a problem, and there are studies that say the chemical sector will most badly affected.’
In survey of CIA members, about half of respondents said their contingency plans included stockpiling inputs near their production sites, and outputs near customers. ‘About 80% are close to completing those contingencies,’ said Nick Sturgeon, CIA’s energy and competitiveness director.
A similar number were planning to switch chemical registrations under Reach to an EU entity, but only half have thus far implemented it, Sturgeon added. However, about 3000 of the UK’s 12,000 chemical registrations have already been transferred to EU27 companies.
‘If there is a silver lining in all this incredibly unproductive work over the past three years, it’s the level of understanding and appreciation among UK ministers, opposition and officials about the supply chain and manufacturing,’ Elliott said. ‘Our challenge is how we exploit that in the future.’