THE UK chemicals sector could lose as much as £7bn/y (US10.1bn/y) in exports if the country votes to leave the EU in the so-called Brexit referendum.
Trade credit insurance firm Euler Hermes has warned that if the UK exits the EU without a free trade agreement (FTA) higher import and financing costs will lead to a decline in exports, estimating a maximum annual loss of £7bn. This would be a 14% decline on the value of current exports, according to figures from the UK Chemicals Industry Association.
The UK’s Conservative government has promised a referendum on the country’s membership in the EU by the close of 2017. Prime Minister David Cameron is seeking to renegotiate the terms of membership, including giving greater power to national parliaments to block EU legislation, halting UK contributions to eurozone bailouts, and limiting state benefits for migrants. A public vote to stay or leave is expected later this year.
Those clamouring to leave argue that the UK can secure more tailored trade deals with non-EU members, spend the money saved on EU membership for scientific research and new industries, and take back control of the likes of employment, health and safety and immigration law.
Those campaigning for the UK to stay in the EU have argued that leaving will see an increase in trade tariffs, and by being on the outside the UK will no longer have a say over product regulations that exporting companies must comply with. Furthermore, they warn that by standing alone, the UK diminishes its power to negotiate deals with non-EU countries.
“With over half of the chemical industry’s exports heading to the EU, any decision to break away from continental trading partners would have knock-on effects on the supply chain and put jobs at risk,” said Ana Boata, European economist at Euler Hermes. “The figures emphasise the importance of negotiations to secure an FTA in the event of Britain leaving the EU.”
Even with an FTA in place, Euler Hermes estimates that chemical companies could see a loss of up to £2.5bn in annual exports.
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