28 November 2019

UK in a Changing Europe: Auto industry issues stark new warning on no deal Brexit

Speaking at the annual dinner of the Society of Motor Manufacturers and Traders, the chief executive Mike Hawes commented that “rather than producing 2m cars a year by 2020, a no deal worst case scenario could see us making just a million. That’s a loss to the economy of over £40bn.”

He added that this would see “cherished production lines mothballed, workforces cut, a haemorrhaging of skills, of investment. What a travesty.”

Some 1.5m fewer cars would be produced by British auto plants over the next five years, the SMMT warned, should the auto industry face World Trade Organisation (WTO) rules and 10% tariffs – whether in a direct no deal Brexit or at the end of the transition period.

The SMMT drew on new research which suggests that tariffs could add £3.2bn a year to costs in Britain, which is of the order of 90% of the industry’s research and development budget.

It stated that a combination of falling demand (linked to the imposition of tariffs) and multinational auto firms shifting production elsewhere could see UK factories’ annual output falling to 1m vehicles per year, from 1.3m now.

Back in 2016, before the EU referendum, output was rising, peaking that year at 1.7m, and at that point the auto industry was predicting that more than 2m cars would be rolling off UK production lines by 2020. That hope now seems pretty distant.

The SMMT warned that the cumulative cost of a no deal Brexit by 2024 would be £42.7bn and that thousands of jobs would be at a risk without a Brexit deal. It stressed that the sector directly employs 168,000 people in Britain, paying decent wages (the wider industry accounts for over 800,000 jobs in the UK it is thought). [...]

Full analysis on UK in a Changing Europe

Related article on The Guardian: No-deal Brexit 'would cost UK car industry £40bn by 2024'

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