Another Brexit dividend: Suppliers are running scared of doing business with Britain

Today I am chairing a couple of break-out sessions at the Make UK annual conference, a gathering of British manufacturers. These are uncertain times for those who will get together in Westminster- last year the principal guest company on the panel was BritishVolt, and we all know what happened to them.

This year’s big subject is the re-shoring of suppliers into the UK, a continuing trend as industry finds that supply chain volatility has become permanent. Make UK have commissioned a report on the issue for their conference and it makes for sobering reading.

Sending overseas all the work of making goods, parts and components might have been cheaper in the short term, but it has turned out to be riskier than anyone thought after Brexit – expensive and therefore not worth the candle. This sounds like a good news story for Leavers; with business and jobs returning to the UK just as they promised. Yet the devil is in the detail.

Some 50% of manufacturers have re-shored suppliers in the last year alone and a similar number plan to do so this year. Behind that good news lurks a more worrying trend. One of the biggest reasons for companies re-shoring is that their suppliers, in Europe and beyond, are increasingly reluctant to supply the UK.

Almost 50% of all EU suppliers are more cautious about selling into the UK and even 33% of non-EU suppliers are now reticent about supplying UK firms.

The main reasons for that reticence are obvious and include what Make UK calls diplomatically “the difficult political relationship affecting trade between the UK and EU”. There is the prospect of regulatory divergence and the challenge of staying competitive when the real power game is being played out between the world’s economic superpowers, including the USA and the EU. The political chaos of the last year has also damaged the image of the UK as a place that foreign investors might want to put their money.

In short, Brexit. It has made trading with the UK and investing in the UK more difficult and riskier.

So even the Holy Grail for the ultra-Brexiteers – the prospect of tearing up every EU trade rule and regulation and inventing our own – is not some great opportunity to undercut our rivals, as some have painted it, but a direct threat to trade and investment.

It is doubtful that this survey or anything else will stop the present government from continuing down this disastrous path, it has long passed the point where it listened to business or experts or even made common-sense decisions based on the data.

It is in an intellectual quagmire of its own creation; the facts do not fit the loony theories of its ultras and so must be wrong. Remember these are the people who don’t think Brexit has gone far enough, fast enough. They would do even more damage if only they could.