The failure of a draft deal for the UK’s breakaway from the European Union has become a major disappointment for the business community, leaving it without any clarity on investment decisions, according to the UK’s chemicals trade group, the CIA.
The failure of the vote to pass the withdrawal agreement in the House of Commons this week implies that no clear idea of how the country’s post-Brexit trading relationship will be with the EU will emerge in the near term, with just two months left before the departure date.
An extended period of political uncertainty makes it difficult or impossible for companies to finalise investment plans, says the CIA. European chemicals trade group CEFIC has also expressed its concern at the outcome of the vote.
Germany’s chemicals body, VCI, has expressed its dismay at the outcome, claiming that the possibility of a no-deal Brexit looms larger than before the vote.
Exiting the EU without a deal will be calamitous for the chemicals industry, due to complex supply chains woven between the UK and the rest of the 28-country bloc. UK chemicals sectors rely on the bloc as an end market, and the intricate structure of chemicals regulations in the region.
Following the failure, UK chemical companies and their trading partners are preparing to ramp up for a no-deal Brexit situation as that will be in a default legal position, despite financial markets’ optimism that it can be avoided.
