On the day on which the PM is supposed to clarify her Brexit ambitions and call on the country to “come together”, a parliamentary committee report has highlighted the dangers of a “no deal” scenario could risk the future of UK car production. The May government has repeatedly ruled out continued membership of the single market and the customs union, of course.
The report by the Business, Energy and Industrial Strategy Committee (BEIS) suggests that a “no deal” situation would risk hundreds of thousands of jobs in the UK car manufacturing sector and allied areas. Such a situation would lead to the introduction of tariffs on cars and other barriers to trade which would make the sector unable to compete with rivals in the EU. The government retorted with its standard platitude that it “wanted a deal that maintains the industry’s strength” but provided no details as to how this could be achieved.
The BEIS report pointed out that much of UK output is destined for the EU market and that its success was based on “complex supply chains” that are pan-European. Failure to protect the industry would put £4.5 billion in exports at risk and jeopardise hundred of millions of pounds in inwards investment.
The BEIS report went on to state that it was “unrealistic” to imagine that new trade deals would offset the damage of a hard Brexit where the UK must trade with the EU under WTO rules. Furthermore, any divergence in regulations between the EU and UK (over motor vehicles, in this instance) would come at a cost to UK car manufacturers and they urged the government to focus on “damage limitation”.
The chairman of BEIS, Rachel Reeves, noted: "There is no credible argument to suggest there are advantages to be gained from Brexit for the UK car industry. Regulatory consistency and friction-free trade benefits car companies, consumers and car-workers. The Prime Minister now needs to ensure common-sense pragmatism prevails and spell out the Government's intention to seek continued regulatory and trading alignment with the EU in the automotive sector."
As they say, this story will run and run…