Doors to manual
Airbus threats over Brexit no deal could hit jobs and suppliers Ayesha Javed
AEROSPACE company Airbus is heaping pressure on the UK Government to reach an agreement on post-brexit trade with the EU, by threatening to withdraw investment from Britain if it fails to reach a deal.
The pan-european plane maker, which has more than 4,000 suppliers in the UK, says it supports 110,000 jobs in the British supply chain.
A report by Oxford Economics identified Airbus’s contribution to the UK economy in 2015 as £7.8bn.
What is the issue?
Airbus says it is “increasingly concerned by the lack of progress” on the Brexit process. It says that Brexit imposes “additional major risks to the aerospace sector compared to other industries”.
Airbus’s supply chain crosses the Channel “multiple times” and it relies on frictionless trade through the EU customs union and single market rules.
Airbus believes that any change in customs procedures, logistics or environmental standards would “have major industrial and cost impact”.
What are the risks of a no-deal Brexit?
If the UK leaves the EU without a deal in place by March 29 2019, trade would instead be subject to World Trade Organisation rules, creating “frictions” that would “heavily impact” Airbus’s operations.
The company says it will require €1bn (£877m) worth of buffer stocks. This means that every disruption would turn into “an unrecoverable delay”, and incur costs that could result in a weekly loss of up to €1bn.
The company says that the uncertainty of a trade deal may also impact Airbus’s investment in its “Wing of Tomorrow” programme, which was set up in 2015 in Filton, possibly moving it outside of the UK.
An orderly Brexit is “better but still risky”.
An “orderly exit” would be “a much better outcome”, Airbus says, but would still pose “a significant amount of risk and be difficult to manage as the proposed transition phase seems too short for governments to agree on all important open points”.
Airbus has urged the Government to address the regulatory framework for aviation “urgently”. It says that the additional costs of trade procedures – which it estimates to be €1bn a year for the “aerospace ecosystem”– as well as airworthiness efforts are among the critical issues it faces.
Why is Airbus speaking out now? Airbus’s biggest shareholders are the French and German governments, who each own 11pc. Some will say it is being used as a proxy to pressure the Government. Airbus argues that with less than a year until the UK leaves the EU, it can’t sit on its hands any longer.