A no-deal Brexit would deliver a “knockout blow” to the competitiveness of Britain’s automotive sector and could cost it more than £70m a day due to delays at the border, the industry’s trade body has warned.
The Society of Motor Manufacturers and Traders on Tuesday said leaving the EU without a deal would lead to the end of borderless trade that could bring “crippling disruption” to the industry’s just-in-time operating model.
New analysis by SMMT concluded that if all the 1,100 trucks that deliver some 42m components into the UK from the continent every day were held up for 24 hours, the resulting production stoppages could cost the industry about £50,000 a minute, or more than £70m a day in this worst-case scenario.
Combined with tariffs that would apply under World Trade Organization rules, this would deliver “a knockout blow to the sector’s competitiveness, undermining a decade of extraordinary growth”, the study found.
“No-deal remains the clear and present danger,” said Mike Hawes, SMMT chief executive.
“The next PM’s first job in office must be to secure a deal that maintains frictionless trade because, for our industry, ‘no deal’ is not an option,” he added, insisting that “this is not project fear”.
The industry, Mr Hawes warned, faced “death by a thousand cuts,” where a gradual erosion of competitiveness would make it harder for companies to invest.
Britain’s automotive sector is the UK’s biggest exporter of goods, and executives have repeatedly warned of the impact of a hard Brexit on its operations. The uncertainty over the terms of Britain’s eventual exit from the EU, currently scheduled for October 31, has already led to new investment falling by 80 per cent over the past three years, according to the SMMT.
A number of car companies moved production shutdowns from the summer to April ahead of March 29, the first scheduled date for Britain’s exit from the EU. This would no longer be possible in the autumn, according to Mr Hawes.
Britain’s car industry was revived by a raft of inward investment, led by Japanese manufacturers, in the 1980s and 1990s, but it is struggling to secure new capital spending to safeguard existing factories amid Brexit uncertainty.
The sector’s predicament has been exacerbated by non-Brexit developments. Ford announced earlier this month it would shut its Bridgend factory in 2020 with the loss of 1,700 jobs while Japanese rival Honda has said it plans to close its Swindon car plant. Both companies said their decisions were for commercial reasons and not related to the UK’s departure from the EU.
Without the automotive industry the UK risked losing its status as the world’s 10th-largest exporter of goods, dropping down to 14th place, the SMMT said.
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