The growth of the UK chemical industry market is hampered

At a time when European macro-economy was weak and the future of the British government's exit from Europe was uncertain, the British chemical industry was also affected. Recently, the British Chemical Industry Association (CIA) released forecast data that chemical production in the UK, including pharmaceuticals, will increase by 0.5% in 2019, a significant slowdown compared with the 1.8% increase in chemical production in 2018. On April 9, Nick Sterkin, director of energy and competitiveness at CIA, said that the growth rate of chemical production in the UK was slowing down, showing a weak momentum. The first reason for the weakness lies in the macroeconomic situation in Europe. The macroeconomic situation in Europe as a whole is weakening and industrial growth is slowing down. In particular, Germany, the traditional economic leader, is slowing its car production due to new emission standards, as is Italy, another big industrial country.

Sterkin said that for Britain, consumer spending in 2018 was stable, but manufacturing and construction showed a weak trend. The UK's chemical production excluding pharmaceuticals grew by only 0.3% in 2018, comparable to the growth rate in 2017. In 2018, exports and imports of chemicals and drugs in the UK both fell by 1.5%, with a trade deficit of 1.2 billion pounds ($1.6 billion), similar to that of previous years. Since the EU referendum in 2016, the depreciation of the pound still has some positive effects on chemical exports, and in this case, the market situation is still unsatisfactory.

Britain's delisting also has a significant impact on the British chemical industry, and the negative is more than the positive. The latest CIA business survey shows that sales of CIA member companies increased by 10% in the first quarter of 2019. However, Sitkin said that this may be because the uncertainty in Britain caused the backlog of stocks and is a "bubble". In fact, CIA surveys show that the UK chemical industry is not optimistic about the prospects for the next 12 months, although about half of the respondents expect the situation to remain largely unchanged. CIA members believe that the low value of the pound, new capacity and new products are their most important opportunities for next year, while the uncertainty of exit from Europe and the cost of plateau materials are the biggest threats.

Britain originally planned to leave the EU on April 12, but the lower house of Parliament was unable to pass an effective agreement. On April 10, the time limit for EU exit was pushed to October 31 in order to prevent further adverse effects on the UK and EU markets caused by non-agreement. But the unease in the chemical industry is stronger. On April 11, CIA CEO Steve Elliott said at a news conference that the delay in the time to leave Europe would be a major setback for companies because it would prolong uncertainty and be harmful to the chemical industry. He called on Parliament to find a quick and viable solution, rather than to continue to procrastinate over the next six months.

At present, the British Government is developing a system to copy the EU Regulations on Chemical Registration, Assessment, Authorization and Restriction (REACH) in order to prevent the absence of agreement. In addition, the government also announced that if there is no de-EU agreement, the UK chemical tariff will be abolished. However, CIA members opposed the plan because import competition could intensify. The UK chemical industry plans to submit the proposed first phase of the industry agreement to the UK government within the next four to six weeks. The agreement will initially implement the industrial strategy of the chemical industry through the joint commitment of the government and the chemical sector.