Uncertainty around the UK’s post-Brexit trading arrangements is an “unacceptable risk” for the UK paper industry, says the director general of the Confederation of Paper Industries (CPI).
Andrew Large has written an open letter to the prime minister expressing concern about the possibility of a no-deal outcome and the resulting disruption when the UK leaves the EU in March.
The UK paper industry employs 56,000 people in manufacturing plus 86,000 supported in other sectors. It contributes £4bn in gross value to the UK economy.
Large warned that leaving without a deal would mean exposure for the UK’s paper-based industries to continued investment uncertainty, and risks damaging competitiveness for years. Uncertainty may now already be causing the UK to lose out in investment.
In his letter, Large warned Teresa May that businesses faced a “cliff edge” and needed certainty. EU-based trade and supply chains needed to be safeguarded without extra costs, disruption from tariffs or non-tariff barriers, or loss of access to skills.
He argued that any deal would need to include a sustainable and competitive energy and environmental policy in order for paper businesses to transition to low-carbon manufacturing. A drive in investment was needed, not an increase in costs, he warned.
Large said: “We started off with a no-deal being a possible but unlikely outcome, but we are now at the stage where it’s a 50:50 outcome and that is an unacceptable risk for business, particularly for those with headquarters outside the UK.
“We remain cautiously optimistic that there is a deal there to be done. We are not at the stage where we are pessimistic, but it is useful to remind people as to how much is at stake if a deal can’t be done.”
Large said that a no-deal scenario would be extremely worrying: “It clearly depends on the type of no-deal Brexit, but the primary concern is the place of the British paper industry across the European supply chain.
“Nine out of 10 of the UK’s largest paper-makers are headquartered in another EU country and they are very dependent on cross-European pulp, engineering, service staff, parts, maintenance and labour.
“They are also dependent on sales of recovered paper to other parts of the EU, and these longstanding relationships are being put into question.”
Large highlighted concerns around the practicalities at borders. He said that, whatever the politicians agree, it is how the agreement translates into instructions at the borders that will be important.
“What are the physical work instructions given to customs officers across the EU? Unless they have been given instructions clearly that they will accept British goods, [there will be problems].
“A customs officer loses his job if he lets something in that he shouldn’t. He doesn’t lose his job if he doesn’t let something in he should have.”
Details required of non-EU goods coming into the EU are extensive. Large said that UK companies may not have that information available because it has not been needed for so long.
He said: “In the past 40 years, we have got away with not having this sort of detail. Nobody else looks or is that bothered because we are all under the same regulatory umbrella.
“I foresee a long period of perhaps months rather than weeks [of disruption] because paperwork isn’t absolutely right.”