Car industry says no-deal Brexit would cost €110 billion
Automotive industry bodies have issued a joint statement to urge negotiators from the UK and the European Union to conclude a trade deal.
If they fail to reach agreement and the transition period for the UK’s departure from the EU ends with no deal in place, it would be “catastrophic” for the car industry, they said.
The UK left the European Union at the start of 2020, but existing trading arrangements have remained in place during a transition period that will end on December 31.
Signatories to the joint statement, including the UK’s Society of Motor Manufacturers and Traders (SMMT) and 22 associations from EU countries, said a no-deal Brexit would cost the European car industry €110 billion in the five years that follow.
Without a deal, both sides would be forced to trade under World Trade Organisation non-preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks. “Such tariffs would almost certainly need to be passed on to consumers, making vehicles more expensive, reducing choice, and impacting demand,” the statement said.
Industry associations have calculated that, before covid-19, EU and UK production of motor vehicles was running at 18.5 million units a year. For cars and vans alone, a reduction in demand resulting from a 10% tariff could wipe three million units from EU and UK factory output over the next five years, with losses costing UK plants €52.8 billion and EU car factories €57.7 billion over that period.
SMMT chief executive,? Mike Hawes, said: “These figures paint a bleak picture of the devastation that would follow a no-deal Brexit. The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk. Our industries are deeply integrated so we urge all parties to recognise the needs of this vital provider of jobs and economic prosperity, and pull out every single stop to secure an ambitious free-trade deal now, before it is too late.”
