UK chemicals, pharma industries concerned about future EU trade

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Chemical and pharmaceutical companies have reported a second successive quarter of expansion at the end of 2020, according to the Chemical Industries Association (CIA), but expressed concern over the future of EU trade.

In the CIA’s survey, 57% of businesses reported total sales growth and 26% reported no material change. Within this, 84% reported stability or growth in domestic sales, and 83% in exports. More specifically, 87% reported stability in EU exports (the industry’s biggest market) and 84% reported a similar outlook for ‘rest of the world’ markets. Finally, more than 40% of companies confirmed increases in production levels and new orders.

CIA’s chief executive Steve Elliot said the numbers reflected both the criticality of the industry to the economy and broader society in a challenging environment, but also the hard work of chemical businesses and their workforces across the UK.

“With order books relatively strong – despite the disruption of COVID-19 and our exit from the EU – all we ask is that supportive conditions for competitive advanced manufacturing are put in place to allow us to build on our resilient 2020 performance and enable us to play our part throughout 2021 in boosting productivity across the UK, and deliver solutions to meet our net-zero ambitions,” said Elliot.

“Our survey also produced questions about the need to get this country’s future global trading relationships right. As one of the most highly regulated sectors, our industry’s regulatory framework needs to be in close step with that of our key export markets to enable continued and increasing access.

“Should standards drop, or should there continue to be an approach that does not recognise or efficiently link to the legal standards we met while in the EU, then prohibitive costs will mean investment in the UK will fall, undoing much of our strong performance to date.

“There is high degree of concern about the cost of energy in the UK. While we are part of the solution to deliver a net-zero economy because of the products and technologies we make, a system that sees us pay twice the amount for our electricity as other European countries is an ongoing blocker of opportunity.”

Elliot said the organisation is “relieved” there is a agreement on a future trading relationship with the EU, commenting: “I hope that the current freight and logistics challenges faced by chemical companies soon start to ease as businesses and authorities become more familiar with the new trading arrangements. That would leave the remaining and significant challenge of delivering an effective and proportionate REACH regime in the UK, and we look forward to working with the UK Government to deliver an outcome that best addresses health, environmental, and commercial concerns.”

The wider UK chemical industry annually exports over £57 billion (€64 billion) of goods, while adding £18.3 billion (€20.7 billion) in value to the UK economy. The industry employs more than 150,000 people, and has an annual business investment of around £5.9 billion with a further £5.9 billion (€6.6 billion) being spent on R&D, equivalent to 21.9% of total UK business spend.

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