So here we are - at the Brexit cliff edge. At the time of writing, the exact nature of the departure and its aftermath are still uncertain. Political manoeuvring at Westminster and last-minute negotiations with the EU over the Irish backstop aside, the odds against a ‘crash-out’, hard Brexit have shortened.
Warnings over border chaos, interrupted supply chains and the like have grown more strident. Matched only by the emollient words of Brexiteers anticipating a WTO-ruled post-Halloween nirvana. The only clarity about the impending fundamental shift in relations with our nearest economic and political neighbours is that the world post-Brexit will be very different - in the long term if not immediately.
Some 40 years of ever more complex and detailed regulative and customary links will change; some will be covered even in the worst-case scenario by emergency provisions – airline services will not stop on 1 November – but trying to assess how things might be by this time next year, or even further out is beyond easy and rational analysis.
A cautious view is that most of the really significant effects on aerospace and aviation will be felt over the longer term – a gradual unravelling of several strands linking the UK with European aerospace. The long view is likely to reveal some hard truths about the future of UK aerospace and aviation, especially if the breach is not soft and negotiated in good faith and with good will all-round with a decent transition period to ease the way out.
The manner of our departure will shape the air transport, manufacturing, research, and security links with Europe over the coming decade, and perhaps well beyond.
Other clouds gather
A further complication – and an additional source of uncertainty – for both the aerospace and aviation sectors is the extent, depth and duration of what is seen by many economists as the next global recession lurking just round the corner. Technically, the UK and Germany are already only one quarter away from an official recession. The EU is in general facing tough economic conditions with other political fissures hampering an effective response. Despite apparently better figures, the US economy is slowing down if not sliding closer to recession.
Globally, matters will not be helped by trans-Pacific and trans-Atlantic tensions over trade. Even without Brexit issues (or the immediate problems at Seattle), 2020 would be shaping up as potentially a difficult year for aerospace and aviation.
Looking into the dark glass
But what can we realistically say about the current position?
At a macro level, the UK Aerospace and defence trade association (ADS) has detected a Brexit-related fall in production over the last quarter. ADS cite Brexit uncertainties as the main factor depressing output. It also estimates that companies spent over £600 million preparing for Brexit – largely stimulated by the last (postponed) deadline – actions which are expected to be repeated for 31 October.
Smaller aerospace companies will face the greatest difficulty, especially if, like a large number of UK SMEs generally, they have not begun to take the administrative steps to anticipate new customs requirements and regulatory needs.
Although under WTO trading rules aerospace has some tariff exemptions, the exact position facing supplier companies may require a case-by-case approach. Other estimates suggest that UK aerospace could lose as much as £3bn a year with a no-deal exit. (end of excerpt)
Click here for the full story, on the Aerosociety website.