No-Deal Brexit Adding Further Stress To UK Aerospace Amid COVID-19
LONDON—British aerospace firms will be less well-resourced to cope with a no-deal Brexit if the UK government and the European Union cannot come to a consensus on a future trading relationship by the end of the year, industry has warned.
The impact of the novel coronavirus pandemic has meant that industry “does not have the resources to throw at it [no-deal Brexit] the way that they may have done during 2019…they are all finding it actually quite difficult,” said Paul Everitt, CEO of UK aerospace, defense, security and space trade association ADS.
Although the UK already formally left the trading bloc on Jan. 31, a transition agreement means the UK continues to participate in the EU’s Single Market and Customs Union, giving time for the UK to prepare for its withdrawal from EU policy and regulation. However, negotiations for an “ambitious partnership” have so far shown “little progress,” EU documents show, and a deadline allowing the UK to extend its transition on June 30 has come and gone.
“We still want a deal,” Everitt told journalists. “We have been pushing for both sides to conclude a deal in the coming months.”
No-deal has long been described as the nightmare scenario for aerospace because of the impact on costs of trade, delays, and bureaucratic requirements and their impact on aerospace’s complex supply chain.
Industry had spent millions of pounds during 2019 preparing for potential no-deal scenarios that ultimately did not occur. Precautions included moving certification and licensing approvals to Europe and building up buffer stocks in case of disruption to supply chains caused by delays associated with new customs arrangements at UK ports.
“Many businesses want to see more detail from the government around the specifics of the customs arrangements,” Everitt said. There also has been a push to ensure there is a stand-alone bilateral aviation safety agreement to de-risk any issues that come from that certification, he added. The UK already has said it plans to exit the European Union Aviation Safety Agency at the end of the year and restore State of Design responsibilities back on the national regulator, the UK Civil Aviation Authority.
ADS has called on the British government to provide a package of support to the aerospace industry like that seen in other countries such as France and Germany, in part to stem a growing tide of redundancies being made.
“At this point, we would have ideally liked the level of support and earlier in this process…but [the government] clearly feels that it doesn’t wish to make too many commitments on a sector-specific basis at this point in time,” Everitt said. He said he was hopeful that the UK government might be able to develop something “at least as impactful” as the initiatives in France and Germany by the fall.
Everitt would not be specific on figures but has called for more research and development investment for civil aviation and decarbonization efforts as well as more surety for defense and security programs.
Post-COVID-19, Everitt said there were “patches of blue sky up ahead,” adding that the “fundamental drivers for growth in the civil aviation market are still there,” but added that the next few months are going to be difficult.