Motor industry tells Brexit negotiators ‘We need interim deal’
The UK automotive industry has called on Brexit negotiators to agree an interim arrangement with the EU that would maintain membership of the single market and customs union until a final deal is implemented.
The Society of Motor Manufacturers and Traders said it accepted that the UK would leave the EU but it was anxious to secure an agreement that would allow the crucially important industry to sustain its development.
The SMMT said that the “hugely complex” Brexit agenda was unlikely to be concluded by the March 2019 deadline and so contingencies had to be put in place to ensure the UK industry remained viable.
It said that without an interim arrangement, businesses would be faced with the ‘cliff edge’ and forced to trade under the World Trade Organisation rules, which it said would mean the worst foreseeable outcome for the sector, its employees and the British economy.
Speaking as the sector announced its annual performance figures, the SMMT said it was time to be pragmatic about what could be achieved in the time available and what the consequences would be if the UK left without a deal.
It said the UK and EU automotive sectors were highly integrated and any new relationship would need to address tariff and non-tariff barriers, regulatory and labour issues, all of which would take time to negotiate.
Mike Hawes, SMMT Chief Executive, said: “We accept that we are leaving the EU 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. 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 trade body said the UK automotive industry had 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 its finished vehicles – four times as many as its next biggest market.
The sector exports to over 160 different global markets and has a consistent approach to free trade. The SMMT said it needed that trade to be tariff-free and as frictionless as possible to support the continued prosperity of the industry.
Latest figures from the SMMT show the UK automotive industry continued to advance its sustainability in 2016, making gains in productivity, economic contribution and environmental impact.
UK Automotive’s 18th annual Sustainability Report reveals the manufacturing sector turned over a record £77.5bn 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. Meanwhile, 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.
The record turnover by UK motor manufacturing represents a 9% increase on 2015, with the additional value added to the UK economy rising 7.3% to £21.5bn.
The industry also upped its investment in innovation, with R&D spend reaching £2.75bn last year, up from £2.5bn in 2015.
