Worsening relations between the UK government and the European Union (EU) continue to raise concerns in Britain’s aerospace sector over skills shortages, supply chain disruption, and access to key export markets. Publishing its latest summary of industry data on Tuesday, trade group ADS indicated that the UK’s unilateral move to renege on its Brexit trade agreement with the EU on rules governing the movement of goods in and out of Northern Ireland could undermine progress achieved in ensuring smooth working relations in the aerospace sector since the UK left the EU in January 2020.
“The situation is still not completely clear due to the political uncertainty,” said ADS chief executive Kevin Craven, when asked at a June 28 press conference in London whether the UK and EU could find common ground to unlock restrictions on the movement of skilled labor and goods. “[Disagreement over] the Northern Ireland protocol is still hurting the industry with some companies still not wanting to send supplies there. And the uncertainty is also unhelpful when it comes to resolving negotiations on issues such as maintenance [regulations and licensing] and other risks.”
One immediate ramification of the row over the Northern Ireland protocol that forms part of the trade agreement is access for UK companies to the Horizon Europe research and development program, which the EU has now suspended. Craven told AIN that the UK government now needs to urgently allocate the alternative sources of funding it has promised and deliver on the details of how. “The government needs to close the funding gap, but it is already spending beyond its means and so its capacity to invest further seems limited,” he added.
“There is still a desire among European companies and industry organizations to trade with the UK [aerospace sector], but there is a general feeling of irritation over the political grandstanding, and this limbo this creates is very difficult,” Craven said.
Last week, the UK’s Conservative introduced legislation to parliament that would give it the authority to overrule some requirements of the trade deal. The EU has said this would constitute a breach of international law and has not ruled out retaliating with sanctions that could hurt British industries, including aerospace.
According to the latest ADS data, in 2021 the UK’s aerospace sector earned revenues of £22.4 billion ($27.3 billion), with £15.2 billion coming from exports. It directly employs 111,000 people, including 5,500 apprentices.
ADS chief economist Amie Stone reported that skills shortages, supply chain problems, and other increases in the cost of doing business resulting from rising global inflation have constrained the aerospace sector’s recovery from the Covid pandemic. She said that as of April 2022, production levels were 40.5 percent lower than they had been in February 2020. “Aircraft deliveries, led by single-aisle aircraft, and also [scheduled airline] flights are now recovering, but it will take some time for this to show up in the data,” she told reporters.
The trade group is preparing to host the 2022 Farnborough International Airshow next month (July 18 to 22). The biennial event is returning after a four-year break since the Covid crisis forced the cancellation of the 2020 show.
Farnborough International chief executive Gareth Rogers said that the organization expects more than 1,000 exhibitors and between 70,000 and 80,000 trade visitors, which are comparable numbers to those seen in 2018. Organizers have introduced a new Global Aerospace Forum to provide a high-level platform for the industry to key objectives such as delivering an environmentally sustainable future for aviation, which Rogers described as an “existential” challenge.