Britain's car industry cautions: No-deal Brexit is our nightmare (updated)
31/07/2018 12:57
* Spectre of disorderly exit from EU looms in divided UK
* British car output in first half fell by 3.3 percent
* UK consumer confidence below pre-Brexit vote levels
* Britain to tell France: Please help avoid Brexit accident
*
(Adds Hunt comments in Evening Standard newspaper)
By Andy Bruce and William James
LONDON, July 31 (Reuters) - A no-deal Brexit would seriously
damage the car industry in Britain and the European Union by
raising costs and sowing chaos for carmakers and consumers
alike, the head of Britain's car industry warned on Tuesday.
With less than eight months until Britain is due to exit the
EU, Prime Minister Theresa May has yet to find a proposal to
maintain economic ties with the bloc that pleases both sides of
her divided party and is acceptable to negotiators in Brussels.
May has stepped up planning for a so-called "no-deal" Brexit
that would see the world's fifth-largest economy crash out of
the EU on March 29, 2019, a step that could spook financial
markets and dislocate trade flows across Europe and beyond.
Her foreign minister, Jeremy Hunt, pressed the government's
message on Tuesday, saying the "real chance of no deal" that
would hurt both sides could be stopped if the EU adopted a
"pragmatic and sensible" approach that prioritised jobs.
urn:newsml:reuters.com:*:nS8N1TG013
Mike Hawes, chief executive of the Society of Motor
Manufacturers and Traders (SMMT), said carmakers were
increasingly concerned about the lack of clarity around the
manner of Britain's departure from the EU.
That has raised the prospect of Britain leaving with no deal
and falling back on World Trade Organization rules that could
leave British car exporters facing EU import tariffs of around
10 percent.
"No deal ... is just not an option. It would be seriously
damaging to the industry not just in the UK but in Europe as
well," Hawes told reporters as he presented SMMT's mid-year
update on British car production. urn:newsml:reuters.com:*:nL9N1RO00I
At stake is the future of one of Britain's few manufacturing
success stories since the 1980s -- a car industry employing over
850,000 people and generating annual turnover of $110 billion.
Much of the industry is owned by foreign companies.
The world's biggest carmakers, including Toyota 7203.T ,
BMW BMWG.DE and Ford F.N , have urged Britain to ensure that
they can import and export without hindrance after Brexit.
Supporters of Brexit say there may be some short-term pain
for Britain's $2.9 trillion economy, but that long-term it will
prosper when cut free from the EU, which some of them cast as a
failing German-dominated experiment in European integration.
"NO DEAL"?
Under the current timetable, London and Brussels hope to get
a final deal in October to give enough time to ratify it by exit
day.
But the potential for major political upheaval remains, with
May's minority government facing a series of make-or-break
moments in the Brexit process over coming months.
She must find a way to strike a deal with the EU, which has
already rejected her preferred plan on trade, sell that deal to
her deeply fractured Conservative Party, and put it to a vote in
parliament.
Failure at any of those three hurdles could cost May her job
and thrust the United Kingdom into crisis.
In an attempt to rally support for May's proposals, Foreign
Secretary Hunt is visiting Paris and Vienna this week.
In an interview with London's Evening Standard newspaper,
Hunt said he would appeal to France and Germany to make the EU
strike a "sensible" pro-jobs trade deal with Britain.
"France and Germany have to send a strong signal to the
Commission that we need to negotiate a pragmatic and sensible
outcome that protects jobs on both sides of the Channel because
for every job lost in the UK, there will be jobs lost in Europe
as well if Brexit goes wrong," he said. urn:newsml:reuters.com:*:nS8N1TG013
Opposition Labour Party leader Jeremy Corbyn could come
under pressure at the party's annual conference in September to
agree to support a referendum on any deal that May can secure,
the Guardian newspaper reported.
There is deep concern in boardrooms about the prospect of
Britain leaving the bloc without a deal, or with a deal that
would silt up the arteries of trade.
That could be highly damaging for a car industry which is
dependent on the speedy movement of huge numbers of parts across
borders. The average car, for example, has about 30,000 parts.
Confidence among British consumers and businesses remains
stuck well below levels before Britons voted in 2016 by a narrow
majority for Brexit, surveys showed on Tuesday, two days before
an expected interest rate increase by the Bank of England.
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The Financial Times reported that the EU's chief negotiator,
Michel Barnier, had softened his opposition to May's Brexit plan
for financial services after Britain acknowledged Brussels would
have ultimate control over the City of London's access to EU
markets.
British car output in the first six months of 2018 fell by
an annual 3.3 percent to 834,402, with disappointing domestic
demand cancelling out strong exports, SMMT said.
(Writing by Guy Faulconbridge
Editing by Mark Heinrich and Catherine Evans)
((mailto:guy.faulconbridge@thomsonreuters.com; 07825218698;))