This is more than just a blip. The UK auto industry is under a great deal of stress. Many manufacturers with plants in the UK have already announced plans to retrench or shut down operations entirely. The Society of Motor Manufacturers & Traders (SMMT), a trade association, indicated that as of May 2019, year-to-date car production dropped by 21.0% compared with May 2018.
Referring to the SMMT’s similar April figures, Mike Hawes, the group’s chief executive, laid the blame at the feet of Brexit: “Today's figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers. Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.”
Other industries aren’t immune from such concerns. The BBC recently reported on the case of a dairy exporter from Melksham, Wiltshire. Around a third of its business is made up of exporting cheese to Canada. Under a current trade deal with the EU, the exports are tariff-free. However, Canada has chosen not to roll over a similar deal with the UK should it leave the EU, meaning that its cheese exports would attract an eye-watering 245% tariff. It’s perhaps unsurprising, then, to see digital ad spend for consumer packaged goods (CPG) also coming under pressure. We still forecast growth this year but, like the auto industry, at a rate below the overall digital average.
The digital advertising industry, while performing relatively robustly in the past three years of Brexit uncertainty, won’t be safe from the negative impacts a no-deal Brexit.
Of course, Johnson might pull off a political miracle and achieve in three months what his predecessor couldn’t in three years. Let’s see how that plays out.