Smart Machines & Factories
Engineering a future outside the EU
Published:  25 October, 2016

A report published by the UK engineering profession hails the government’s renewed focus on industrial strategy as a major opportunity to help the UK compete on the world stage, but warns that Brexit must not restrict access to the engineering skills from across Europe that our economy relies on. Smart Machines & Factories reports.

With engineering contributing at least £280 billion in gross value added to the UK economy (20% of the total) the new report Engineering a future outside the EU: Securing the best outcome for the UK, compiled by an alliance of the UK's professional engineering organisations led by the Royal Academy of Engineering, aims to inform government of the key issues that impact on the UK’s engineering performance as it forms its position on leaving the EU.

It draws on wide-ranging consultation with engineers from all corners of the profession, including from academia, industry and the public sector.

The report highlights the challenge that Brexit could present to the supply of skilled engineers from the EU, who are essential to maintaining the world-class quality and success of UK engineering companies and universities. In academia, engineering has proportionally more staff originating from the EU (15%), than across all subjects as a whole.

The report findings emphasises that uncertainty about the status of EU workers in the UK and further risks to the supply of skilled engineers are likely to result in delays to major infrastructure projects such as HS2, Thames Tideway and Hinkley Point C, which will face recruitment difficulties and increasing costs if demand for labour outstrips supply.

In response to these potential challenges, the report calls on government and the engineering community to work together to take decisive action on the engineering skills crisis, as well as to develop a Shortage Occupation List for engineering positions that cannot be filled domestically in the short term.

Other issues highlighted, include the importance of innovation, which is critical to the UK’s economy and productivity, as sectors with high concentrations of graduate engineers report greater than average levels of innovation activity and innovation-related income alongside greater productivity.

The UK has a globally excellent and highly productive research and innovation base, to which EU support and collaboration has significantly contributed. The report warns, however, that losing access to EU research and innovation funding programmes would pose a considerable risk to the quality and quantity of UK research and innovation, and in turn to UK GDP. Evidence suggests that EU collaboration with UK researchers is already been put on hold or has been scaled back since the referendum, and if European project funding becomes less available, the UK is likely to become a less attractive destination for the brightest and best students and researchers.

In recognition of the importance of European funding streams and collaboration frameworks to UK research and innovation, it recommends that government seeks the closest achievable association with relevant EU programmes, and if needed develop long-term funding streams that complement current funding by encouraging international mobility and collaboration, particularly between industry and academia.

Throughout the consultation process, one opportunity was pointed to repeatedly: the development of a new industrial strategy, in partnership with academia and industry, as a route to enabling engineering to maintain and increase its contribution to economic development and social progress after the UK leaves the EU.

Engineering a future outside the EU highlights the UK’s strengths in attracting foreign direct investment (FDI), including a relatively open attitude to foreign ownership of assets and a flexible labour market. It calls on the government to continue to create the conditions for the UK to attract a high level of FDI by developing policies and frameworks that are designed to lower the costs of doing business and that make the UK an attractive place to invest in.

Standards and legislation are recognised in the findings as non-tariff barriers that are crucial to strong trade relations, with the UK’s continued leading role in developing European and global standards seen as being particularly important. The report emphasises, for example, that it will be necessary for data protection and cyber security laws to be closely comparable to EU law in order to avoid barriers to trade, and that frameworks need to be put in place that allow the UK to continue to collaborate in the digital single market. The internet economy contributes 8% of the UK’s GDP, a greater contribution than in any other G20 country, and policy changes that limit ongoing collaboration in the sector would undermine the UK’s leadership.

Overall, the report calls for an industrial strategy that communicates that the UK is forward looking, open for business, and an active and welcoming partner for the international research, innovation and business communities.