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The UK industries likely to be hit hardest by Brexit

Tom Belger
Finance and policy reporter
Vauxhall has warned production of its Astra model will only continue in Britain if the UK leaves with a deal. Photo: PA

UK manufacturing could be hit harder by Brexit than any other sector of the UK economy, a new study suggests.

Many recent reports and warnings from businesses and experts have highlighted the risks to manufacturing and other industries if Britain crashes out of the EU without a deal.

But new figures indicate manufacturers could suffer most from new tariffs on UK exports and a slowdown in investment even if UK prime minister Boris Johnson did defy expectations and reach an agreement with Brussels.

The study by law firm Irwin Mitchell and the Centre for Economic & Business Research (Cebr) says manufacturing could still shrink by 0.5% this year and 0.8% next year.

The ‘Brexit Disruption Index’ looks at which industrial sectors will be affected most after the UK leaves the EU.

It gave sectors an overall ranking by looking at the impact of likely changes to free movement, tariff regimes and EU investment in Britain.

READ MORE: UK firms’ economic optimism falls to lowest since 2016 EU referendum

The report said of UK manufacturing: “The potential for increased tariffs and complications will drive up the cost of doing business with partners in the EU following Brexit.

“For manufacturing firms outside of the EU who rely on the UK as a gateway into the continent, a Brexit outcome that restricts freedom of trade will further limit the UK’s attractiveness as a place to do business.”

It said the car and other vehicle sales and repair industry could be the second hardest hit.

“UK wholesalers will be severely affected if Brexit impacts the frictionless trade currently enjoyed by businesses in the industry. This will also have consequences for firms in the UK that import parts from across the EU to repair vehicles, many of which will face an increase in costs and possible delays in receiving good,” it explained.

Business admin and support services, a category including employment agencies, security firms, travel agencies and others, is ranked third in terms of disruption.

The report suggests many such firms are highly reliant on the recruitment of EU nationals, which could be highly disrupted when Britain reforms its immigration system after Brexit.

READ MORE: Biggest drop in UK car production since 2011 as firms face perfect storm

The firms most affected by Brexit. Photo: Cebr/Irwin Mitchell