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Insight

Exploring the potential impact of Brexit on the chemical industry

Our recent acquisition, HFL Consulting, have published a great blog post breaking down a few of the Brexit arrangements that will affect the UK chemical industry, including innovation, transport regulations, and international trade. You can view the original blog on HFL's website, or read on below.

With Brexit officially underway, the UK has entered the transition period during which arrangements affecting the chemical industry will be made.

The chemical sector produces around £50 billion worth of exports annually, and 60% of this goes directly to the European Union [1]. 75% of our chemical imports also come from the EU [1], making Brexit a critical time for the sector.

The future of trading is yet to be established. Now is a pivotal period during which the chemical industry, stakeholders and the government need to work together to determine this future, in order to allow for a continuation of chemistry enabled growth.

Continue reading to explore a few of the changes that will be considered and tended to before and after the new rules from Brexit take effect on the 1st January 2021.

Innovation

Joining the government and chemistry sector together is The Chemistry Council. There has recently been an environmentally-friendly partnership proposed where new decarbonisation and sustainability challenges are addressed after Brexit takes place [2].

Members of The Chemistry Council have also recently submitted a 5-year proposal based on the creation of thousands of new jobs in areas of the country where they are most needed [2]. This project will require co-investment by businesses and the Government, but is predicted to help build and strengthen supply chains, while government policies after Brexit would reinforce the continuation of these improvements within the sector.

Transport regulations

As transport regulations come from the UN rather than the EU, the impact on transportation and shipment for chemicals leaving and entering the UK will be limited. One factor to take into consideration, however, would be custom checks, leading to more delays at the border. The other change predicted would be to recast the Carriage of Dangerous Goods and Use of Transportable Pressure Equipment Regulations. The Department for Transport (DfT) is currently in the process of drafting these regulations [3], but it is still uncertain what these changes will be.

International trade

The future of international trade is extremely important. After previously trading within the EU, Brexit now requires the UK to forge its own path when it comes to securing trade deals with countries across the world. As the chemical industry is one of the largest exporters of manufactured goods in the UK, a few issues will need to be addressed when it comes to trade regulations. Leaving the European Union is predicted to have a heavy impact on our trade deals. Japan and Canada (key export markets for the industry) have implied they will not roll over existing arrangements, but will be inclined to review any agreements proposed after Brexit [2].

The UK and European chemical sector cumulate value as a product finishes development. For economic purposes, the UK’s input is always viewed as one that is integrated with the European Union. This means that until trading standards are discussed and the UK and EU have reached an agreement, it is unknown whether UK supplies are stripped from the European supply chain.

If you’re worried about the impact of Brexit on your operations, get in touch with us.