As the Business, Energy and Industrial Strategy Committee met last week to look at the impact of Brexit on the automotive sector, there were calls for the Government to keep the closest possible relationship with the existing EU regulatory and trading framework to give UK volume car manufacturing a realistic chance of survival post-Brexit.
In a recently published report regarding the impact of Brexit on the automotive sector, the BEIS Committee says a no-deal puts hundreds of thousands of UK jobs at risk and threatens hundreds of millions of pounds of inward investment.
The Society of Motor Manufacturers and Traders (SMMT) estimated the introduction of trade barriers to result in a £4.5bn drop in exports while other studies pointed to a greater decline.
The report finds that non-tariff barriers, in the form of border delays and increased bureaucracy, will also impact on UK competitiveness. It recommends the Government to place a high premium in its Brexit negotiations on securing frictionless trade for the automotive sector.
The total turnover in the UK industry was £77.5bn in 2016, but with the UK automotive industry being export-led with Europe as the primary market.
The industry is also one of the most closely integrated sectors with the EU.
The UK automotive sector‘s success is built on the complex supply chains that stretch throughout Europe.
Many components are transferred through different countries before being assembled into the final product in the UK.
The report takes a hard look at potential opportunities arising from Brexit, but finds it unrealistic to expect an expansion of trade overseas to outweigh the loss of trade to Europe arising from a hard Brexit.
Also any new bilateral trade deals secured by the Government are unlikely to lead directly to a significant increase in investment and jobs in the UK automotive sector.
The committee found that retaining good access to the single market would be more important than securing the freedom to secure new trade deals with third countries.
On the key issue of the future regulatory regime, the report does not identify any potential benefits for divergence from the EU, only costs.
The report recommends the Government seeks in the negotiations to preserve existing arrangements for the certification of vehicles throughout the EU, either as part of a Mutual Recognition Agreement or some alternative arrangement.
To maximise trade opportunities with the EU – the UK’s biggest trading partner – and to provide certainty to global manufacturers, the Government should also aim to retain regulatory alignment with the EU regulatory framework for the medium term.
Our Automotive Sector industry employs over 800,000 people across the UK.
It’s all very well for this Government to divide UK industries into high, medium and low priority categories in the Brexit negotiations, with steel, oil and gas sectors marked as low.
We need to develop the UK’s infrastructure and industrial base for the future and make sure nobody is left behind.
Rodney Sadd
Spalding
