LONDON – A parliamentary briefing paper published this week shows that Britain’s oil and gas industry could be crippled if the government fails to secure an adequate post-Brexit trading deal with the EU.
The briefing paper on the importance of trade with the EU for UK businesses shows that 43% of the revenue in the mining and quarrying industry, which is mainly the oil and gas sector, comes from exports to EU. It makes mining and quarrying the most exposed industry to Brexit.
Earlier this year trade body Oil & Gas UK warned that a failure to secure an EU trade deal under a so-called “hard Brexit” would mean £500 million in additional costs for the industry.
Britain’s manufacturing and financial services industries also export significant amounts to the EU, making those sectors vulnerable to increased costs too.
The parliamentary briefing paper includes the below chart on export exposure to the EU by industry, based on Office of National Statistics data from 2013, the most recent available:
Federico Mor, the author of the briefing paper, wrote: “High levels of trade with the EU indicate that an industry is highly integrated into the European Single Market. These industries face higher risks from Brexit, if Brexit makes trade with the EU more difficult.
“The introduction of tariffs (a tax on imports) is one possible barrier to trade, along with a multitude of non-tariff, ‘technical’ barriers. Technical barriers to trade include, for example, differing product standards in the areas of labelling, packaging and safety.”
UK Prime Minister Theresa May has said that “no deal is better than a bad deal” when it comes to a post-Brexit trade deal, signalling she is willing to pursue a so-called “hard Brexit” – cutting off all relationships with the EU and starting again from scratch.
However, the government has edged away from this position in recent weeks, with cabinet ministers saying Britain will push for a bespoke transition period, which will allow the government more time to negotiate a full trade deal.
The vast majority of British businesses believe that dropping out of the European Union without an agreement would be a disaster.