Earlier this month, EU automotive industry figures came together to express their fears about a potential no deal Brexit. They warned that negotiators on both sides must now pull out all the stops to avoid no deal at the end of the transition, which according to new calculations would cost the pan-European automotive sector some £100billion (€109bn) in lost trade over the next five years. They warned this would put jobs at risk in a sector that supports 14.6 million livelihoods, representing one in 15 of EU and UK jobs.
The lead organisations representing vehicle and parts makers across the EU, spanning 23 countries in Europe, said that their business could face severe repercussions.
The fears come as Europe and the UK both suffer the economic consequences of the coronavirus pandemic.
Before the crisis hit, EU and UK production of motor vehicles was running at 18.5 million units-a-year.
In 2020, 3.6 million units have already been lost across the sector due to the pandemic.
New calculations suggest that, for cars and vans alone, a reduction in demand resulting from a 10 percent World Trade Organisation (WTO) tariff could wipe some three million units from EU and UK factory output over the next five years.
This could lead to losses worth £47billion (€51bn) to UK plants and £52billion (€57bn) to those based across the EU. Suppliers would also suffer from these changes.
Eric-Mark Huitema, ACEA Director General spoke of his concerns for the European car industry.
He said: “The stakes are high for the EU auto industry – we absolutely must have an ambitious EU-UK trade agreement in place by January. Otherwise our sector – already reeling from the COVID crisis – will be hit hard by a double whammy.”
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Mike Hawes, Society of Motor Manufacturers and Traders Chief Executive, said: “These figures paint a bleak picture of the devastation that would follow a ‘no deal’ Brexit.
“The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk.
“Our industries are deeply integrated so we urge all parties to recognise the needs of this vital provider of jobs and economic prosperity, and pull out every single stop to secure an ambitious free trade deal now, before it is too late.”
Hildegard Müller, President of German Association of the Automotive Industry, said: “The automotive industry needs stable and reliable framework conditions. It would be to the great disadvantage of both sides if the UK withdrawal were to end with the application of tariffs in mutual trade.
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“This would jeopardise closely linked value chains and possibly make them unprofitable.
“Our member companies have more than 100 production sites in the United Kingdom. We hope that the EU and the UK will continue their close partnership – with a comprehensive free trade agreement.”
Brexit talks have also been stalled by both parties’ red lines on fisheries and regulation.
Michel Barnier, the bloc’s negotiator, told the UK if it wanted access to European markets, the EU must also be granted access to UK fishing grounds.