Nearly three-quarters of UK automotive businesses believe that a ‘no-deal’ Brexit would harm their future viability – with the head of the Society of Motor Manufacturers and Traders again warning that failure to leave the European Union without an agreement would lead to plants being shut and jobs lost.
Prime Minister Theresa May and European Union leaders have reached a withdrawal agreement on the terms of Britain’s departure from the EU on March 29, 2019, which includes a 21-month ‘transition period’.
They have also agreed a statement on the future relationship, which will be used to guide the creation of a legally binding treaty. Those agreements will be voted on by the UK parliament on 11 December and, if not approved, could still lead to Britain exiting the EU without a deal. While the SMMT has welcomed that draft agreement, the lack of a long-term agreement remains a concern.
Speaking at the SMMT’s annual dinner, chief executive Mike Hawes said that Brexit “remained the biggest challenge for all of us”, and was already harming investment in “technology, people and our future.”
Hawes added: “We need a deal. No deal would be catastrophic. Plants will close. Jobs will be lost.”
While Hawes said the Withdrawal Agreement’s transition period would “step us back from the cliff edge”, there had been no firm agreement on the future trade framework beyond that.
“We need an ambitious future relationship,” he said. “One that replicates the benefits of the customs union and the single market. No tariffs, no quotas, no rules of origin. No regulatory divergence. No border checks, and frictionless trade.”
Adding that any deal must be “ambitious”, Hawes added that: “Leaving is not what we wanted. For us, Brexit is about damage limitation. There is no ‘Brexit dividend’.”
Tony Walker, the outgoing president of the SMMT and head of Toyota Motor Europe’s London office, added that: “Crashing out of the EU would have immediate and devastating impacts, with border chaos disrupting the 'Just in Time' basis on which our business depends. Disruption could last for weeks – even months.”
Survey reveals Industry fears
The SMMT’s comments were backed up by the results of the SMMT’s Brexit survey, with 74.1% of automotive companies that had UK operations saying a ‘no-deal’ Brexit would damage their business, compared to 8.39% who felt it would have a positive or very positive effect. Similarly, 68.53% of firms felt failure to reach a deal would have a negative or very negative impact on their profitability.
The survey also found that 55.55% of firms said the Brexit process had already had a negative or very negative impact on their business. Nearly half of all businesses also feared a no-deal Brexit could harm their ability to maintain their existing workforce.