No deal Brexit is not an option, Britain's car industry warns
31/07/2018 24:01
By Andy Bruce
LONDON, July 31 (Reuters) - A no-deal Brexit is not an
option for Britain's car industry, given the costs and
disruption that carmakers and consumers would suffer, the head
of the country's automobile industry group said on Tuesday.
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 European Union.
With less than eight months until the divorce is due to take
place, 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.
That has raised the prospect of Britain leaving the EU with
no deal and falling back on World Trade Organisation 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.
The industry employs more than 850,000 people directly and
indirectly in Britain.
While carmakers were encouraged by May's Brexit proposals
published this month, Hawes said big questions remained around
the costs of any new customs arrangements, Hawes said.
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.
In June alone, production fell 5.5 percent compared with
June 2017, despite output for export markets rising 6.0 percent.
Production for the domestic market slumped 47 percent. Hawes
said this mainly reflected an unusual combination of changes in
model cycles and manufacturers getting ready for new emission
standards, with production set to recover in subsequent months.
"Looking at the long-term picture, the sector is performing
as expected in the context of market conditions at home and
abroad," Hawes said.
BRACING FOR BREXIT
Production of motor vehicles accounts for almost a tenth of
British manufacturing output, making it is one of the key
battleground industries ahead of Britain's exit from the EU.
Hawes said Britain's car manufacturers were getting as
"ready as possible" for any disruption from a no-deal Brexit.
While the major international car manufacturers were used to
dealing with complex issues around global trade, Brexit
preparations were more of a concern for the smaller companies
across the supply chain, Hawes said.
Economists polled by Reuters have said a no-deal Brexit is
the third most-likely outcome, behind a new free trade deal
between Britain and the EU and continued membership by Britain
of the European Economic Area's single market. BOE/INT
Hawes said the tone of a recent meeting between U.S.
President Donald Trump and European Commission President
Jean-Claude Juncker on trade was encouraging, even though their
statement excluded reference to automotive tariffs which Trump
had previously suggested for European car imports.
"What we would say is that any increase in tariffs would be
significant and would be damaging both to the U.S. and in
Europe, and I include (Britain) in Europe when it comes to
exports," Hawes said.
(Reporting by Andy Bruce
Editing by William Schomberg)
((andy.bruce@thomsonreuters.com; +442075423484; Reuters
Messaging: andy.bruce.thomsonreuters.com@reuters.net))