The SMMT stance
- UK government must secure interim arrangements to safeguard future of UK motor industry and avoid a cliff edge.
- SMMT believes a final agreement on a new relationship with EU that benefits UK automotive will not be achieved by March 2019.
- UK must maintain single market and customs union membership pending a final agreement on a new relationship with the EU.
THE UK automotive industry has today called on government to seek an interim EU deal that would maintain membership of the single market and customs union until a final agreement on a new relationship with the EU is negotiated and implemented.
The sector accepts that the UK will leave the EU and fully supports a bespoke and comprehensive agreement on a new relationship with the EU.
However, a final agreement would be hugely complex and it does not believe such a comprehensive agreement can be reached by March 2019 – just over 20 months’ time.
Without agreed interim arrangements, businesses would be faced with the ‘cliff edge’ and forced to trade under the World Trade Organisation rules – the worst foreseeable outcome for the sector, its employees and the British economy.
UK automotive success
- UK Automotive’s 18th annual Sustainability Report reveals the manufacturing sector turned over a record £77.5 billion in 2016, marking a seventh consecutive year of growth, while productivity, production output and vehicle sales also increased.
- UK car and commercial vehicle production and new vehicle registration volumes grew to record levels in 2016, up 8.9% and 0.2% respectively.
- Employment in manufacturing remained stable at 169,000 jobs, resulting in productivity reaching a record high of 11.8 vehicles produced for each person employed in the industry.
- The average manufacturing worker generated more than £130,000 for the British economy, up 9.8% on 2015. The number of livelihoods dependent on the sector as a whole stood at 814,000 across manufacturing, retail, distribution and repair services.
Speaking today as the sector announced its annual performance figures, Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes said it was time to be pragmatic about what can be achieved in the time available and what the consequences would be if the UK left without a deal.
The UK and EU automotive sectors are highly integrated and any new relationship will need to address tariff and non-tariff barriers, regulatory and labour issues, all of which will take time to negotiate.
He said: “We accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that, in two years’ time, we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior WTO terms.
‘We need a back-up plan’
“This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.
“That’s why we have to be honest with ourselves. If the UK cannot secure – and implement – a bespoke and comprehensive new relationship with the EU in two years’ time, we need a back-up plan.
“Having looked at all the alternatives, we need government to seek an interim arrangement whereby we stay within the single market and customs union until that new relationship is implemented.”
The UK automotive industry has always maintained the importance of the EU to its prosperity. The EU is by far the UK’s biggest automotive export market, taking over half our finished vehicles, four times as many as our next biggest market.
The sector already exports to over 160 different global markets and has a consistent approach to free trade. It needs that trade to be tariff-free, as frictionless as possible to support the ‘just in time’ manufacturing process and with consistent regulation.
