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UK car industry faces threat of post-Brexit ‘extinction’

Vidya Ram London | Updated on June 13, 2018

Parting pain Northern Ireland is the Achiles’ heel of Brexit /iStockphoto egal

Industry chief warns of lack of clarity about trade relations with Europe

Sections of British manufacturing sector and, in particular, parts of the car industry, risked becoming “extinct” should Britain not be within a customs union with the EU after Brexit, the head of Britain’s main industry body said on Wednesday, as the British Parliament continues to debate key EU withdrawal legislation.

“Be in no doubt. That is the reality,” warned Paul Dreschler, head of the CBI, in an interview with the BBC, as he blamed a neglect of economics in favour of ideology and politics, for the lack of consideration given to industry needs in the country’s approach to Brexit.

He added that there was “zero evidence” that trade deals with non-EU countries – touted by senior government officials as the long-term driver of post-Brexit Britain’s economic growth – would provide economic benefit to Britain.

He also lambasted the lack of clarity that had been given to business so far on the future direction of relations with Europe on the level of detail that mattered for investment.

“Every single day in my job I am aware of decisions about investments…about delays and deferrals,” he said.

The concerns were dismissed by Prime Minister Theresa May at Prime Ministers Questions. “We are looking to ensure that the future customs arrangement that we have with the EU has as frictionless trade with the European Union as possible…but also enables us to have an independent trade policy and helps us negotiate trade deals around the world.”

His comments come just days after Jaguar Land Rover announced plans to shift production of its Land Rover Discovery to Slovakia, as part of an overhaul of its long-term manufacturing strategy. While the company did not link the decision to Brexit, it has in the past warned of the uncertainties caused by Brexit as well as levies imposed by the UK government on diesel vehicles.

It, however, insisted investments being made at the same time to its UK facilities highlighted its commitment to Britain.

The CBI’s concerns were reiterated by the auto sector’s industry body, the SMMT.

“Any model that fails to replicate the benefits of the trading relationship we currently enjoy with our largest market will be bad for UK Automotive, resulting in major disruptions to vehicle manufacturers and their supply chains,” said its Chief Executive Mike Hawes.

“Free and frictionless trade with the EU has been the foundation of the UK automotive industry’s recent success, with single market and customs union membership creating the conditions needed for our highly efficient ‘just in time’ manufacturing processes.”

In March, Members of the House of Commons Business Committee warned that the automotive sector, which was currently one of the “most productive and successful” in the country would be “hugely” damaged by leaving the EU without a deal, pointing to the intricate nature of the supply chains.

The comments came ahead of the second day of debate on the highly contentious EU Withdrawal Bill, the centre plank of Brexit-related legislation on which the government has come under pressure, after a number of amendments were made in the House of Lords.

Published on June 13, 2018

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