Blog: Brexit: EU suppliers wary about doing business in UK, warn manufacturers – The Guardian

Business leaders say frayed relations with the EU are costing the British economy, as suppliers in the bloc grow more cautious about doing business with post-Brexit Britain.

Adding to the pressure on Rishi Sunak’s government as bosses warn that the UK is falling behind its peers, the manufacturers’ group Make UK called for an urgent reset of political and trading relationships with the EU.

The trade body said almost half of UK manufacturers in a survey of more than 100 leading industrial companies said their EU suppliers had grown more cautious about doing business in Britain.

It also said a fraught post-Brexit relationship could have a damaging impact on trade ties elsewhere around the world, amid signs that companies from farther afield have also grown more cautious about supplying into the UK.

In a speech at its national manufacturing conference in London on Tuesday, the chief executive of Make UK, Stephen Phipson, will argue that the report underlines the need to build stronger relations with the EU after Brexit.

Calling on the government to make further progress after the “Windsor framework” deal on post-Brexit trade in Northern Ireland, he will say: “We need to reset our political and trading relationship with the EU which has been marked by such rancour.

“I want to applaud the positive approach taken by the prime minister which shows what can be achieved when you work pragmatically and collaboratively, rather than thumping the table or issuing threats. Hopefully the agreement reached last week will be the beginning of a new chapter.”

Earlier this year, Make UK said more than 40% of manufacturers thought the political chaos of the last year had damaged the image of the UK as a place for foreign direct investment.

With growing caution among international counterparts about doing business in Britain, the latest health check on the industrial sector showed that many firms were looking to find suppliers closer to home, as well as diversifying their supply chains amid concerns over political instability.

Almost a fifth of manufacturers said they had reduced the number of suppliers from the EU in the last 12 months. However, the report showed damage to the UK’s image and trading relationship was not limited to partners in the EU, with 35% of firms agreeing that suppliers from the rest of the world were also cautious about Britain.

The US bank Citigroup said on Monday that it planned to double its number of staff in Paris by building a new trading floor in the French capital, part of a gradual shift by global lenders away from London after decades of using the UK as a hub for EU business.

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Fabio Lisanti, the head of the bank’s trading business in Europe excluding the UK, told Bloomberg News that London would remain its main location in the region, but that more staff were being relocated to Paris.

“We’ve already moved quite a few and there’s more to go,” he said. “We’ve been able to hire talent in Paris that we would never have been able to attract in London.”

A Department for Business and Trade spokesperson said: “A recent poll of global CEOs found the UK ranked third for investment, demonstrating that our low-tax, high-skill economy remains highly attractive to business leaders around the world.

“The government is placing major investment in growth sectors like advanced manufacturing and life sciences, and supporting businesses further by cutting the cost of energy for our most energy intensive industries.”

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