Want to know how no-deal Brexit fears are already hurting the U.K.?
Just ask Martin McVicar, who runs Combilift, which produces about 6,000 forklift trucks annually in Ireland for export. Up until this year, he imported seats costing about 200 euros ($232) apiece from a Welsh factory. Now, he’s switched the 1.2 million-euro contract to a German manufacturer, fearing a hard Brexit will hit his existing supply chain.
“Brexit’s the driver — we wouldn’t have changed otherwise,” McVicar said, sitting in Combilift’s gleaming factory in Monaghan, about 10 miles from the border with Northern Ireland. “We’re not growing our supply chain in the U.K., we’re curtailing it until we see clarity.”
McVicar’s decision is a microcosm of the pain already inflicted on the economy by Brexit, much of which is linked to uncertainty about what kind of deal the U.K. will secure with the European Union when it leaves the bloc in March. The Brexit vote has already cost Britain more than 2 percent of economic output, according to analysis by UBS Group AG, published Monday.
Bank of England Governor Mark Carney has said Brexit is the “overwhelming issue” for most companies and it’s holding back investment. While the U.K. economy bounced back in the second quarter from a turgid start to the year, growth remains below its average in the three years before the 2016 referendum.
Courtesy of Bloomberg