A no-deal Brexit would put “hundreds of thousands of UK
jobs at risk and threaten hundreds of millions of pounds of inward investment”,
MPs have warned.
The House of Commons Business, Energy and Industrial
Strategy (BEIS) Committee has, as a result, called on the government to keep
the “closest possible relationship” with the existing European Union regulatory
and trading framework to give UK volume car manufacturing a “realistic chance
of survival post-Brexit”.
The Committee’s report, ‘Leaving the EU: Implications for the Automotive Industry’, highlights that the Society of Motor
Manufacturers and Traders (SMMT) estimated the introduction of trade barriers
to result in a £4.5 billion drop in exports while other studies pointed to a
The report found that non-tariff barriers, in the form of
border delays and increased bureaucracy, would also impact on UK competitiveness.
The report recommended that the government placed a high
premium in its Brexit negotiations on securing frictionless trade for the
automotive sector stressing that it
should seek continued regulatory and trading alignment
with European Union.
Rachel Reeves, chairman of the Committee, said: “The car
industry is one of the UK’s great manufacturing successes. Innovative and
efficient car plants across the country provide thousands of jobs and the
automotive sector is a major contributor to our economic growth.
“There is no credible argument to suggest there are
advantages to be gained from Brexit for the UK car industry.
“Regulatory consistency and friction-free trade benefits
car companies, consumers and car-workers. The Prime Minister now needs to
ensure common-sense pragmatism prevails and spell out the government’s
intention to seek continued regulatory and trading alignment with the European
Union in the automotive sector.”
The UK automotive industry is largely export-led with Europe
as the primary market. The industry is also one of the most closely integrated
sectors with the European Union with the UK’s success built on the complex
supply chains that stretch throughout Europe: typically, parts are transferred
through different countries before being assembled into the final product.
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.
The report also states that any new bilateral trade deals
secured by the government were unlikely to lead directly to a significant
increase in investment and jobs in the UK automotive sector.
As a result, the Committee said that retaining good
access to the single market was 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 did not identify any potential benefits from divergence from the European
Union, only costs. Consequently, the Committee recommends the government seeks
in its negotiations to preserve existing arrangements for the certification of
vehicles throughout the European Union, either as part of a Mutual Recognition
Agreement or some alternative arrangement.
And to maximise trade opportunities with the European
Union - the UK’s biggest trading partner - and to provide certainty to global
manufacturers, the government should also aim to retain regulatory alignment
with the European Union regulatory framework for the short to medium term.
- The report was published 24 hours after Toyota
gave a vote of confidence to the UK motor industry by announcing that it would
produce the third generation Auris will be at its car plant in Burnaston,
Derbyshire, with its factory in Deeside, North Wales, the main source for its
engines. The model had its world premiere at the Geneva Motor Show, which
opened this week. Dr Johan van Zyl, Toyota Motor Europe’s president and CEO,
said: “As a company, we are doing what we can to secure the competitiveness of
our UK operations as a leading manufacturing centre for our European business.
With around 85% of our UK vehicle production exported to European markets,
continued free and frictionless trade between the UK and Europe will be vital
for future success.”