Cost of no-deal Brexit on automotive industry revealed
UK automotive leaders have joined together in a Europe-wide warning about the “catastrophic” impact that a no-deal Brexit could have on the industry.
Business groups across Europe are calling for an urgent agreement of a free trade deal before the transition period draws to a close in 15 weeks’ time.
If World Trade Organisation tariffs are introduced, it could put the production of three million EU and UK-built cars and vans at risk, it has been warned.
In the event of a no-deal Brexit, combined EU-UK trade losses of up to €110 billion to 2025 could be seen, on top of the €100 billion of production value lost as a result of the coronavirus crisis, it has been estimated.
A report by the European Automobile Manufacturers Association (ACEA) and the European Association of Automotive Suppliers (CLEPA) along with 21 national associations has said that an urgent deal which delivers zero tariffs is required in order to avoid a second economic hit for the sector.
If a deal isn’t struck and in place by December 31, firms would be required to trade under so-called WTO non-preferential rules, including a 10 per cent tariff on cars and up to 22 per cent on vans and trucks. This hike would almost certainly be passed down to the consumer.
Mike Hawes, SMMT chief executive, 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.”
Eric-Mark Huitema, ACEA director general, added: “We absolutely must have an ambitious EU-UK trade agreement in place by January. Otherwise our sector, already reeling from the Covid crisis, will be hit hard by a double whammy.”