The Society of Motor Manufacturers & Traders (SMMT) has called on the Government to secure an interim agreement with the European Union (EU) to safeguard the future of the UK motor industry until a final agreement on Brexit is reached.
Formal talks over Britain’s withdrawal from the EU began in Brussels yesterday, and are expected to take up to two years to complete.
SMMT chief executive Mike Hawes said the UK automotive industry accepted that Britain would be leaving the EU, but raised doubts as to whether a final deal on a future relationship could be finalised and implemented by March 2019.
Hawes called Brexit "the greatest challenge the industry has faced in a generation", and said it was vital an interim agreement be secured by the British government to safeguard the country's motor industry.
"Any Brexit agreement will be hugely complex," said Hawes. "We [the UK] must negotiate with 28 countries, each with their own vested interests, making a March 2019 completion date to negotiations - as indicated by the triggering of Article 50 - feel somewhat ambitious.
"We need to be pragmatic - we are not going to be able to negotiate a plan of the complexity we require in that time and an interim deal would give us stability. We need no tariffs, frictionless trade and no uncertainty, as we have today, if we are to keep growing the industry during this period.
"Uncertainty risks death by a thousand cuts - this is an incredibly competitive global industry, with major investment decisions being made all of the time. If there is any uncertainty it erodes our competitiveness, because the companies making the major investments don't like uncertainty. If we have an interim deal that maintains what we have today then it allows time to negotiate a full deal without the risk of the UK dropping off a cliff edge that could undermine our industry permanently.
"This uncertainty cannot be allowed to drag on and drag down UK business," he said. "We need business as usual from day one - this process will likely take five years or more, not two. We need an arrangement for as long as it takes, otherwise we risk damaging our business permanently."
Hawes did note that, in the long-term, there could be positives to come out of Brexit. He said: "We trade with 160 countries and there could be ways to reduce tariffs with some, for instance, or for small-volume manufacturers to work to new regulatory requirements that improve competitiveness."