LONDON (Reuters) – A no-deal Brexit would seriously damage the car industry in Britain and the European Union by raising costs and sowing chaos for carmakers and consumers alike, the head of Britain’s car industry warned yesterday.
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With less than eight months until Britain is due to exit the EU, Prime Minister Theresa May has yet to find a proposal to maintain economic ties with the bloc that pleases both sides of her divided party and is acceptable to negotiators in Brussels.
Ms May has stepped up precautionary planning for a so-called “no-deal” Brexit that would see the world’s fifth largest economy crash out of the EU on March 29, 2019, a step that could spook financial markets and dislocate trade flows across Europe and beyond.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said carmakers were increasingly concerned about the lack of clarity around the manner of Britain’s departure from the EU.
That has raised the prospect of Britain leaving with no deal and falling back on World Trade Organisation rules that could leave British car exporters facing EU import tariffs of around 10 percent.
“No deal… is just not an option. It would be seriously damaging to the industry not just in the UK but in Europe as well,” Mr Hawes told reporters as he presented SMMT’s mid-year update on British car production.
At stake is the future of one of Britain’s few manufacturing success stories since the 1980s – a car industry employing over 850,000 people and generating annual turnover of $110 billion. Much of the industry is owned by foreign companies.
The world’s biggest carmakers including Toyota, BMW and Ford have urged Britain to ensure that they can import and export without hindrance after Brexit.
In an attempt to rally support for Ms May’s proposals, Foreign Secretary Jeremy Hunt visits Paris and Vienna this week.
“I will be explaining to my counterparts in Paris and Vienna that it is time for the EU to engage with our proposals, or we potentially face the prospect of a no-deal by accident, which would be very challenging for both the UK and EU,” Mr Hunt said.
There is deep concern in boardrooms about the prospect of Britain leaving the bloc without a deal or with a deal that would silt up the arteries of trade.
That could be highly damaging for a car industry which is dependent on the speedy movement of huge numbers of parts across borders. The average car, for example, has about 30,000 parts.