Derek Vaughan MEP

Working hard for Wales in Europe

Daily Post Column - Welsh manufacturing needs reassurance on Brexit

It is welcome that in that last year all of the major political parties have come to embrace the need for a proactive industrial strategy. Unfortunately, this has come because leaving the European Union, a huge hi-tech market place of 500 million people, now means that without Government intervention British manufacturing may suffer greatly without access to the Single Market and the customs union.
 
News that Nissan is investing in its plant in Sunderland is excellent. Seven thousand jobs are at that plant and a further 30,000 jobs in the local supply chain. However, Nissan has been clear that they will stay if the Government will guarantee tariff free access to the Single Market or compensate them if tariffs are imposed. The Government says that may be able to get this access for specific industries, but the President of the Commission has said that he will not let the UK treat the Single Market like a “buffet”, suggesting there will not be opt-ins for individual industries. The upshot of this is that the Government may end up being in a position of paying Nissan’s tariffs for it. Which means that money that could be spent on teaching our kids, treating our elderly and defending our country will go to Nissan’s HQ in Tokyo. It also raises the question about whether this approach is sustainable, realistically the Government will not be able to do this for every business. We know that companies do not think that is a risk worth taken after the reduction of the number of engines made in the Ford plant in Bridgend down to 125,000 from 250,000 previously, showing that they are reducing their reliance on the UK. We need to make sure Airbus remain committed, not just for the next few years but for decades to come, with their factory in Broughton.
 
The most likely outcome of a chaotic Brexit where we do not get the deal we need is steady decline. The big companies based here will slowly reduce their plants and reliance on a UK base will transfer to EU countries where they can boost their profit margins. The Government will try and stave this off with sweetheart deals that will be very expensive to the taxpayer, this will ensure that a few companies stay, but these will become more and more difficult to hold on to and the EU may begin to feel that our state help is undercutting EU industry and begin to raise tariffs.
 
By staying in the Single Market and creating a proactive industrial strategy we would avoid this problem and be able to build a manufacturing base in the UK that not only survives but thrives.

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