Brexit warnings by Airbus and Siemens cannot be ignored

Major UK manufacturers know what they are talking about, unlike those clamouring for a no-deal exit
  
  

Airbus
Airbus says it could move wing construction from the UK in case of a no-deal Brexit. Photograph: Marcus Brandt/EPA

Empty threats, say Brexiters of the claims made by Airbus and Siemens that plans are under way across industry to slash investment budgets and possibly close factories should the UK quit the European Union’s single market and customs union on 29 March.

Worse than that, Mark Francois MP, an arch Tory Brexit campaigner, says it amounts to bullying. He said Airbus’s German boss was guilty of “Teutonic arrogance”.

Yet, without a deal – one that at least keeps the UK in the customs union during a transition period – it is clear to all but the most short-sighted that the UK is a train careering off a cliff or a ship heading for an iceberg – take your pick.

Airbus, which builds the wings for its planes in the UK, has conceded that the latest Brexit comments were scheduled to chime with the government’s campaign to get Theresa May’s deal through parliament before a crucial week. There was also a strong element of seething frustration from Tom Enders, the chief executive; enough that Brexiters could claim he displayed an irrational sense of doom.

However, Enders is not one to kid around. “Please don’t listen to the Brexiters’ madness, which asserts that because we have huge plants here we will not move and we will always be here. They are wrong,” he said.

The European aerospace group is one of the biggest manufacturers in the UK, where it employs more than 14,000 people. And one thing we know about successful industries is that size matters.

That’s why the UK can count its car, pharmaceuticals, chemicals and aerospace industries as being among the largest in the world.

These have built up an ecosystem of relationships with suppliers, financiers, universities and in many cases trade unions that provide a depth of understanding and a breadth of resources that draw in more businesses each year.

Jaguar Land Rover is one of the stars in this story, executing a turnaround that has seen it become Britain’s biggest car manufacturer in just 10 years. Today it is one of the chief critics of a hard Brexit.

Siemens UK boss Jürgen Maier says it is easy to forget that his company scooped up the UK’s electronics industry from the remains of Plessey, Marconi and Ferranti, which in their heyday were world class, but had been abandoned during the 1980s to rot: leaderless, poorly managed, underinvested and riven by staff disputes.

Today electronics is one of the fastest-growing manufacturing sectors. However, Maier says he is already seeing investment switch to the continent.

He doesn’t think quitting the single market and customs union will be akin to falling off a cliff. A factory can have a long lifespan. But without investment, it slowly dies.

In the case of the car industry, which needs a colossal injection of funds to make the transition to electric and hybrid cars, factories look more like dominoes standing in a line. The last thing they need are extra barriers to trade.

Airbus and its £6bn annual UK turnover is the cornerstone of the British aerospace industry, and not just the 110,000 jobs that exist in the supply chain. The levels of research and expertise that Bombardier and the many other plane-makers feed off become uneconomic without the likes of Airbus.

Scale can be seen in service industries that serve the world as well as the UK, like finance, architecture, advertising, law and accountancy. They add value and keep UK plc afloat. Theresa May ignores these facts at her peril.

Cinema strikes back against the Netflix empire

British cinema is popping the champagne after revealing last week that 2018 was its best year in almost five decades. Cinema attendance hit 177 million, the highest since 1970 when hits including M*A*S*H, Love Story and Airport helped fill 193 million seats.

The figures cap a renaissance in cinemagoing, after a long decline from the 1950s to the early 1980s as first TV and then video recorders took hold. Attendance hit an all-time low of 54 million in 1984, a year of releases including Beverly Hills Cop, Ghostbusters, The Karate Kid, Police Academy and Footloose.

The performance defies the commonly held view that in the Netflix era people prefer to stay on the sofa to stream a film or devour a box set. A combination of factors, including advancing big-screen technology, which has ushered in the era of spectacular special effects underpinning the modern blockbuster, and major investment in upgrading the theatre experience has fuelled the growing popularity. The number of UK screens has risen from 3,600 in 2007 to almost 4,500 last year, with the number of 3D screens rising from five in 2006 to 2,049 in 2017.

Outside the multiplex model, which accounts for more than 80% of screens, smaller operators, including the Everyman, Picturehouse and Curzon chains offering a high-end, arthouse experience, have flourished.

Netflix is aiming to gain the respect of Hollywood with the heavily Oscar-tipped Alfonso Cuarón film Roma, which has 10 nominations. However, the digital upstart’s model of preferring to deliver its content to subscribers first, instead of honouring the tradition of giving a cinematic release to new films, remains a bone of contention.

Nevertheless, strong movie attendance numbers indicate that the tradition of heading to the theatre is not set to become as obsolete as the CD and DVD, both rapidly dying in the streaming revolution.

Insecurity and low wages take the shine off ‘booming’ jobs market

In the final weeks before Britain’s scheduled departure from the EU, amid all the warnings of chaos, one aspect of the UK economy which appears relatively resilient is the booming jobs market.

Not since the years immediately after Britain joined the EU in the 1970s has the employment picture seemingly looked healthier. The jobless rate, having fallen to 4% according to data last week, is equal to the winter of 1974-75. Employment has reached the highest level since comparable records began in 1971.

Meanwhile, after a lost decade of wage growth, pay packets are growing at the fastest rate in a decade.

On the face of things, this is good news. Almost 3 million jobs have been created over the past decade since the financial crisis, with clear benefits for households in former unemployment blackspots, as well as for poorer families.

Yet, for all the fanfare the government gives the employment figures, deep problems remain. Economists believe some of the growth since the 2016 EU referendum has been due to a reluctance to invest in technology given the lack of clarity over the future. Workers are easier to hire and fire should things go wrong.

Self-employment accounted for two-thirds of the latest rise in employment, reflecting this trend, with firms seemingly reluctant to offer permanent contracts. Precarious work was, however, rife before the Brexit vote. Zero-hours contracts have begun to decline, but are still the norm for about 780,000 people. Almost a million work on agency contracts and one in seven are self-employed – figures that are significantly above pre-crisis levels.

Real wages remain well below the peak attained before the 2008 financial crisis. Workers are still earning about £10 a week less than when Lehman Brothers was around.

With the foundations of the jobs market built on sand, a damaging no-deal Brexit in less than 70 days’ time would stand to make matters worse.

 

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