Hard Brexit border delays could cost UK auto sector £50k a minute
Border delays from a hard Brexit could cost the UK automotive sector up to £50k a minute, according to the first-ever UK auto trade report.
Published by the Society of Motor Manufacturers and Traders (SMMT), the report highlights the need for the UK’s next Prime Minister to secure a Brexit deal. Leaving the EU without such a deal would see the UK face delays to shipments of parts to production plants. These are measured in minutes, with every 60 seconds costing £50k in gross value added – amounting to some £70m a day in a worst-case scenario.
Combined with WTO tariffs, which for trade in passenger cars alone amount to £4.5bn a year, the SMMT says this would deliver a “knockout blow” to the sector’s competitiveness, undermining a decade of strong growth. Since the global financial recession in 2008 when the auto sector was hit, the UK’s automotive trade value has risen by 118% – from £47bn in 2009 to £101bn in 2018 – while over the same period, car production increased by more than half, with more than eight in 10 vehicles bound for export, the majority to the EU, thanks to barrier-free trade from the customs union and single market. In fact, the auto sector is the UK’s single biggest exporter of goods and accounts for more than 14% of total exports.
Furthermore, impacts on automotive from a hard Brexit would risk the UK losing its status as the world’s 10th biggest exporter of goods, falling to 14th place behind Belgium, Canada, Mexico and Russia.
In contrast, the right deal, with the right business environment and auto-friendly trade strategy, could trigger a 20% uplift in the industry’s global trade value – worth £20bn, if the sector can maximise its full capacity.
Addressing an audience of business leaders and government officials at the industry’s annual International Automotive Summit in London today (25 June), Mike Hawes, SMMT chief executive, said: “Automotive matters to UK trade and to the economy, and this report shows that, if the right choices are made, a bright future is possible. However, ‘no deal’ remains the clear and present danger. We are already seeing the consequences of uncertainty, the fear of no deal. The next PM’s first job in office must be to secure a deal that maintains frictionless trade because, for our industry, ‘no deal’ is not an option and we don’t have the luxury of time.”
The report also sets out eight recommendations for government and industry, including seeking new trade opportunities in key global markets through the removal and reduction of tariff and non-tariff barriers.
To access the SMMT’s report, click here.