Flying taxis and spaceports: why aerospace matters after Brexit
Flying taxis and spaceports: why aerospace matters after Brexit
The high-profile announcements are being made at time of heightened anxiety about the industry’s future when the UK leaves the EU: only 10 days ago Tom Enders, the boss of European airplane marker Airbus, was warning that Theresa May’s government had “no clue” on securing a Brexit that would avoid “severe harm” on the economy.
Airbus has warned it could leave the UK without a deal to remain in the EU’s single market and customs union although on Monday said that last week’s white paper, promising links to the EU after Brexit, was “looking in the right direction” for the industry.
May is further trying to assuage the industry by using the Airshow to herald £343m of investment, saying she wants to “make the most of the opportunities that lie ahead”.
There is money for new spaceports – like the one announced on Monday for the A’Mhoine peninsula in Sutherland between Tongue and Durness in northern Scotland in collaboration with the US company Lockheed Martin. Gavin Williamson, defence minister, announced a new generation fighter jet, Tempest. Rolls-Royce was focusing on the development of an electrical vertical take-off and landing vehicle which could provide the technology for a flying taxi within the next 10 years.
So why does the industry matter? It is already the second largest in the world and two companies listed on the London stock market – BAE Systems and Rolls-Royce – are in the top 10 of the biggest companies in the sector globally.
According to the industry lobby group, the ADS, it employs 120,000 across the UK and another 118,000 in the supply chain. The House of Commons Library has calculated that the south-west of England and the East Midlands account for 43% of the jobs in the industry and that of the annual turnover of over £30bn, 90% is exports.
A report by the MPs on the Business, Industry, Energy and Industrial Strategy (BEIS) committee puts the aerospace’s continuation to the UK economy at 7% of manufacturing output.
The BEIS committee looked at the implications for tariff barriers after Brexit and the impact on aerospace companies from customs barriers. The ADS reckons customs checks could cost the industry £1.5bn a year. Companies such as Airbus are particularly concerned about these customs checks as they operate on a “just in time” manufacturing process which means they move parts around the EU as they are needed to avoid stockpiling parts in warehouses which is costly.
Extra trade tariffs are less of a problem than might be the case for other industries after Brexit as the BEIS committee points out that the UK participates in the World Trade Organization Agreement of Trade in Civil Aircraft which should not be impacted by Brexit.
The European Aviation Safety Agency (EASA) also matters as it gives the UK access to other markets outside the EU and it has a safety agreement with the US Federal Aviation Authority which broadens the market for customers working under its rules. May has said she intends to keep the UK inside the EASA – a move welcomed by the industry although yet to be formally agreed with the EU.
The BEIS committee said there is evidence that Brexit is already having an impact with UK companies being frozen out of the EU’s Galileo satellite programme and preparations being made by companies to push the button on their contingency plans.
But the industry is looking for further growth. New technology for cleaner planes is being developed while Airbus, for instance, has forecast there will be deliveries of 34,000 new aircraft by 2036.