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The UK’s new relationship with the European Union (EU) must meet the needs of every sector of the economy to be a success, as the consequences of leaving any behind could have knock-on effects for others, says the CBI. This follows its largest consultation of members since before the EU referendum.

The CBI has held thousands of conversations across the country with trade associations and firms of all sizes since the summer and taken an in-depth look at the opportunities, concerns and questions that 18 sectors of the UK economy face ahead of EU negotiations in 2017 – on the ease of doing business, regulation, and access to talent.

In Making a Success of Brexit, the CBI calls on the Government to consider the complexity of the modern economy where no business operates in isolation. Products come with complementary services, supply chains overlap across borders, and many companies do not fit neatly into a single sector.

Carolyn Fairbairn, CBI Director-General, said: “Businesses in every corner of the UK are rolling up their sleeves as they prepare for life outside the EU and are committed to making it a success.

“Leaving the EU will be a highly complex process, and all sectors of the economy are making their priorities clear in order to get it right.

“The Government will need to take a ‘whole economy’ approach to avoid leaving sectors behind.”

The CBI’s consultation reveals that many questions are shared by businesses across sectors.

  • Airlines – and the wider aviation sector, which employs nearly one million people – are asking how the Government will seek agreements that allow the smooth transport of holiday-makers, workers and goods, as are logistics companies, haulage firms and retailers
  • Restaurants are asking how they will continue to hire chefs from abroad, while companies in the chemicals and plastics sector – which export towards £30bn worth of products each year – are asking whether they will still be able to access the skilled employees they need at their plants. This is also an issue for logistics firms who already face a shortfall of nearly 35,000 HGV drivers
  • Construction companies – which will build the UK’s new homes, roads and rail in a sector worth over £100bn to the UK economy – are asking about the potential costs of importing materials and the future of the CE marking regime, as are many manufacturers
  • Our world-beating creative industries – which employs nearly 2 million people across music, film, video games, architecture and more – are asking about the future of Intellectual Property and data flows, as are life sciences businesses, technology companies and other sectors.

Carolyn Fairbairn, CBI Director-General, said:

“While each sector has issues specific to them, there are many crossovers and common principles that unite them, for example the need to avoid cliff edge changes that cause disruption to supply chains and trade.

“Where companies differ is how they prioritise these issues and the contrasting emphasis they place on trade, migration and regulation. To make a success of Brexit for the whole economy, Government needs to work through all these issues, as well as seize the opportunities afforded by a new focus on the UK’s global economic relationships.

“From aviation and chemicals to life sciences and agriculture, firms of all sizes will want to understand how easy it will be for them to trade in the future with the EU which remains the biggest market for British businesses. They need to know what rules they will be working by and how they can still secure access to skilled workers and labour, where shortages already exist.”

The report identifies that many legal requirements have cross-sector implications – for example, energy and environmental regulations have an impact on construction, housing, manufacturing, water companies. The success or failure of some sectors could affect others – the future of financial services regulation, for example, has been raised by firms in the automotive, housing, real estate and retail sectors, given the role they play in finance, insurance and pensions. Meanwhile, the increasing diversity of offerings from firms means they have cross-sector interests – some food and drink companies produce biofuels as well as the products on our supermarket shelves, and many manufacturers offer comprehensive services packages alongside their goods.

Carolyn Fairbairn, CBI Director-General, said:

“The modern UK economy is ever more interconnected. Legislation in one sector can have a knock-on effect in many others. For example, any business that handles data or has an online presence can be affected by future digital regulations, not just technology companies.

“The CBI will work closely with the Government to deliver an outcome that helps to meet the needs of firms throughout the UK, building a post-Brexit economy that spreads prosperity to all.”

The CBI has identified six common principles as business priorities:

  1. A barrier-free relationship with our largest, closest and most important trading partner
  2. A clear plan for regulation that gives certainty in the short-term, and in the long-term balances influence, access and opportunity
  3. A migration system which allows businesses to access the skills and labour they need to deliver growth
  4. A renewed focus on global economic relationships, with the business community at their heart
  5. An approach that protects the social and economic benefits of EU funding
  6. A smooth exit from the EU, avoiding a cliff-edge that causes disruption

The CBI consultation also identifies specific issues that may impact different sectors.

Below are a snapshot of some of the issues raised.

Summary of Sector-specific priorities for the UK-EU negotiations

The CBI’s consultation on how to make a success of Brexit has involved businesses across economy. Every sector will be affected by the UK’s exit in some way, and while all agree on the six principles for leaving the EU, some prioritise different aspects over others.

Sector Brexit Views
Agriculture
  • 476,000 employees
  • £8.5 billion GVA
  • £18 billion exports
  • £38.5 billion imports
  • The industry is concerned about facing high tariff and non-tariff barriers to UK-EU trade
  • Continued access to non-graduate labour is critical, both on a full-time and a seasonal basis
  • It would be helpful for the Government to provide further assurances on the future of agricultural regulation, funding for the rural economy, and international trade
Aviation
  • 961,000 employees
  • £52 billion to UK GDP (3.4% of total GDP)
  • £26 billion exports
  • Leaving the EU must not disrupt the UK’s access to the Single Market for Aviation or international aviation markets
  • The UK’s world-leading status in this sector is enhanced by high-skilled immigration and collaboration over international rules
  • Any new funding deal should support innovation in our aerospace industry
Chemicals & Plastics
  • 277,000 employees
  • £17.5 billion GVA (1.1% of total GVA)
  • £26.9 billion exports
  • £27.8 billion imports
  • The chemicals and plastics industry is highly regulated through EU mechanisms and is seeking reassurances of a stable regulatory environment
  • Preferential trading with the EU is important and needs to be as comprehensive as possible for this sector
  • Openness to skilled immigration supports innovation in this sector, as does international collaboration through EU research programmes
Construction
  • 2.2 million employees
  • £102.3 billion GVA (6.2% of total GVA)
  • £1.6 billion exports
  • £1.2 billion imports
  • A large percentage of construction materials are imported from the EU so a tariff-free relationship is important
  • There may be opportunities for more flexible domestic regulation in the construction sector after the UK leaves the EU, but benefits of harmonisation of standards are also important
  • Filling vacancies is already a challenge in the construction sector and must not be exacerbated by the UK’s departure from the EU
Creative Industries
  • 1.9 million employees
  • £87.4 billion GVA (5.3% of total GVA)
  • £19.8 billion exports
  • £8.7 billion imports
  • It is important that the UK’s creative industries are not disadvantaged by tariff and non-tariff barriers to UK-EU trade
  • Long-term mechanisms for regulatory cooperation with the EU may have to be sought to support this sector
  • Creative businesses are global and mobile, so openness to talent is important for this sector
Education
  • 2.9 million employees
  • £98.1 billion GVA (5.9% of total GVA)
  • Uncertainty in the education sector is affecting collaborative projects and international staff and students
  • One of the strengths of the UK’s education sector is its openness to people, which is vital
  • Collaboration with European partners enhances the UK’s research excellence and options should be explored to continue involvement
Energy
  • 140,000 employees
  • 36.2 billion GVA (2.2% of total GVA)
  • 76.7 million tonnes of oil equivalent exports
  • 154.8 million tonnes of oil equivalent imports
  • Continued smooth cross-border trade of energy is vital
  • Uncertainty is high in the energy industry, therefore clarity on domestic policy trajectories will be important throughout the negotiation process
  • The future of Single Electricity Market on the island of Ireland is a particular concern for businesses in this sector
Financial Services
  • 1.1million employees
  • £119.2 billion GVA (7.2% of total GVA)
  • £63.7 billion exports
  • £8.8 billion imports
  • Easy trade with the EU is crucial for continued provision of high-quality financial services
  • Continued access to skilled international workers is important for the financial services industry
  • The UK and EU would both benefit from temporary transitional arrangements in financial services
Food & Drink
  • 444,000 employees
  • £26.0 billion GVA (1.7% of total GVA)
  • £18.2 billion exports
  • £38.5 billion imports
  • Much of the regulation of the food and drink industry is from the EU, and the sector is looking for stability and certainty
  • Mutual recognition of regulations enables easier trade in food and drink, which can be complex
  • Non-graduate EU workers play a vital part in the food and drink industry and as such reassurances and continued access to workers is important
Hospitality, Leisure & Tourism
  • 3.1million employees
  • £121.1 billion of GDP (7.1% of total GDP)
  • £22.0 billion exports (overseas residents visiting UK)
  • £42.4 billion imports (UK residents’ visits abroad)
  • There may be new opportunities for more flexible regulation in this sector after leaving the EU, but areas such as consumer protections should remain strong
  • A new UK migration system should accept the need for non-graduate migration to fill vacancies in this sector
  • Travelling to the UK should be simple in order to attract business and leisure tourism
Housing & Real Estate
  • 2.1 million employees
  • £101.6 billion GVA (6.1% of total GVA)
  • While the majority of regulations of this sector are domestic, many cross-cutting areas of regulation are important
  • This sector is concerned that the UK’s international reputation as a place to live and do business is not affected by departure from the EU
  • It will be important to minimise uncertainty for this sector wherever possible, so businesses have the confidence to invest
Life Sciences
  • 53,000 employees
  • £6.4 billion GVA (0.4% of total GVA)
  • £20.7 billion exports
  • £19.6 billion imports
  • The ease of cross-European flows of life sciences products must be maintained by keeping tariff and non-tariff barriers low
  • Much of the regulation of the life sciences sector stems from the EU, so reassurances of stability are needed – particularly in terms of the sector’s European regulator
  • Openness to people and international collaboration are important for innovation in the sector
Manufacturing
  • 2.7 million employees
  • £162.4 billion GVA (9.8% of total GVA)
  • £228.9 billion exports
  • £313.3 billion imports
  • For manufacturing, the integration between the UK and EU is significant and means low barriers and long-term regulatory cooperation is important
  • Manufacturing companies have concerns about continued access to workers at all levels of skills and about flexible movement
  • Partnership between international education institutions and UK manufacturers have enhanced innovation in the sector
Professional & Business Services
  • 5.8 million employees
  • £204.4 billion GVA (12.3% of total GVA)
  • £70.5 billion exports
  • £40.4 billion imports
  • Critical to professional and business services is the health of the wider UK economy and the UK’s reputation on the global stage
  • Barrier-free access to the EU market in services is linked to regulation and is important for the sector’s growth
  • International skills and flexibility of movement support growth in professional and business services
Retail
  • 5.0 million employees
  • £182.0 billion GVA (10.9% of total GVA)
  • £11.4 billion exports
  • £6.1 billion imports
  • When it comes to trade with the EU and the rest of the world, the retail industry is primarily concerned about keeping costs low and choice and quality high for consumers
  • Maintaining a tariff- and barrier-free relationship with the EU should help UK retail businesses keep costs low for consumers
  • A smooth exit is necessary to ensure the continued supply of retail goods for consumers
Technology
  • 1.2 million employees
  • £95.5 billion GVA (5.7% of total GVA)
  • £20.8 billion exports
  • £29.0 billion imports
  • Barrier-free access to the EU is important, particularly around data flows and the benefits of the digital single market
  • For a global industry like technology, continued access to international talent, expertise and innovation is crucial
  • There are concerns in the sector that if the UK’s exit from the EU is not smooth, there will be disruption and regulatory confusion for businesses
Transport, Distribution & Logistics
  • 1.5 million employees
  • £76.8 billion GVA (4.6% of total)
  • £24.1 billion exports
  • £21.7 billion imports
  • Additional barriers to trade in goods would complicate the workload of this sector first, and should be avoided wherever possible
  • Many jobs within this sector are supported by non-graduate labour from the EU
  • It is vital that the exit from the EU is smooth and involves an adjustment period to allow this industry to adapt
Utilities & Environmental Services
  • 414,000 employees
  • £46.9 billion GVA (2.8% of total GVA)
  • £6.4 billion exports
  • £4.7 billion imports
  • Continuity is needed for the regulations in this sector that originate from the EU or are international but implemented by the EU
  • A smooth exit will ensure that these important services can continue without disruption
  • New domestic funding streams for infrastructure should consider the needs of this sector

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