Carmakers in UK warn of $74 billion Brexit blow
Carmakers in the UK are warning of a 55.4 billion pound ($74 billion) hit to the industry if the country fails to reach a post-Brexit auto trade deal with the European Union.
With a little over a month to go before the Brexit transition period ends, the Society of Motor Manufacturers and Traders on Tuesday issued yet another plea for an agreement that would avoid duties on vehicle exports and imports. Otherwise, it said, annual UK production could fall by almost a quarter to below 1 million units.
“We’ve already spent nigh on a billion pounds preparing for the unknown of Brexit and lost 28 times that to Covid," George Gillespie, the president of the SMMT, said on a webinar. “We need a future trading relationship that works for automotive."
A post-Brexit deal remains elusive after negotiations between the EU and the UK broke down on Thursday after a senior member of the bloc’s team tested positive for the coronavirus. On Monday, Micheal Martin, Ireland’s premier, said he was hopeful the outline of an accord will be clear by the end of the week.
Auto-trade ties between the UK and Europe are tightly intertwined. An absence of a deal would have severe consequences for manufacturers because a 10% duty could be applied to new cars. Even a “bare-bones" accord would cost the industry 14.1 billion pounds, the SMMT said, referring to a deal that doesn’t include issues like rules of origin.
In 2019, more than 80% of the 1.3 million cars built in the UK were exported, with 55% going to the EU. The UK is also a major importer of cars, with over 85% of the 2.3 million sold in the country last year made overseas.
Carmakers in the UK have spent at least 735 million pounds preparing for the country’s exit from the EU. Along with suppliers, they have secured registration numbers, spent significant sums on stockpiling and employing customs agents to deal with the paperwork that will arise as of Jan. 1, according to the SMMT. The trade group also said systems that cut down supply-chain delays are vital.