Exporters are already suffering losses, especially in Wales, northeast England, Yorkshire and Humberside, which have a significant exposure to trade with the EU, according to a report by manufacturing trade body Make UK and business advisory firm BDO, the Guardian wrote.
The East Midlands is also at risk, with manufacturing accounting for almost a fifth of its economy. The EU is its biggest market, accounting for just over half its exports.
According to Make UK, given Wales and the northeast both contain some of the most economically disadvantaged areas of the UK, a hard Brexit is likely to prove especially damaging. The report also warned that the US-China trade war was affecting domestic manufacturing.
Stephen Phipson, the chief executive of Make UK, said: “Although Brexit stockpiling put manufacturing on steroids for a little while, the industry has since gone almost cold turkey and the overall picture over the last year now shows Brexit, global trade wars and the economic downturn in major markets are menacing UK manufacturers.
“In particular, there are some regions of the UK with a very high exposure to trade with the EU and who are likely to suffer a disproportionate double whammy to their economies and jobs from a damaging no-deal exit.”
Last week, the Resolution Foundation said ministers would need to find at least £60 billion to protect families and compensate businesses damaged by the dramatic fall in trade that is expected should the UK quit the EU without a deal on October 31.
Official figures showed that manufacturers last month recorded the sharpest drop in factory output for seven years following a sharp decline in new orders.
Ongoing difficulties in the automotive sector are having an “ominous” impact on manufacturing and regions most closely linked to the industry, such as the West Midlands and the northeast, can expect to see further declines, according to the report.
Tom Lawton, of BDO, said: “The long-term uncertainties around Brexit, minimal progress on the government’s industrial strategy, technological disruption, skills shortages and heightened global competition are all taking their toll on the performance of manufacturers across the UK.
“Companies are already holding back on investment as a result of the prolonged period of Brexit instability and risk lagging behind their global competitors when it comes to the uptake of industry processes and technology. It will be difficult for many manufacturers to regain lost ground in these areas particularly as digital transformation picks up pace.”