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UK car industry warns of £55bn blow from 'no-deal' Brexit

The UK car industry faces dire consequences if slapped with WTO trade tariffs in the EU. Photo: Andrew Matthews/PA via Getty
The UK car industry faces dire consequences if slapped with WTO trade tariffs in the EU. Photo: Andrew Matthews/PA via Getty

The UK car industry wants just one thing for Christmas: a free trade deal with the European Union.

The Society of Motor Manufacturers and Traders (SMMT) warned on Wednesday that the UK is running a serious risk of a “no-deal” Brexit, which would mean World Trade Organisation tariffs will kick in and cost the automotive sector £55.4bn ($74bn) by 2025. Annual production will drop below 1 million units consistently, the industry body said.

The SMMT said that the European automotive sector, including the UK, has already lost €100bn (£89bn, $119bn) to the pandemic. It says it has repeatedly implored EU and UK leaders to make sure the sector is not damaged even further by WTO tariffs from 1 January 2021, which would “deliver another €110bn blow to manufacturers on both sides of the Channel.”


The SMMT said that there is little time left for businesses to prepare for new trading terms, so “the sooner a deal is done and detail communicated, the less harmful it will be for the sector and its workers.”

The deal needs to deliver on several fronts: to keep the UK automotive industry competitive, to power its shift to green mobility, and to safeguard jobs, the SMMT said.

Commenting on the government’s new goal to ban sales of new petrol and diesel cars in the UK from 2030, SMMT chief executive Mike Hawes, called it “an immense challenge.”

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READ MORE: UK plans to ban new petrol and diesel vehicles by 2030

“We are already on the way, transforming an industry built on the combustion engine to one built on electrification. But to complete the job in under a decade is no easy task,” Hawes said.

“Automotive is nothing if not determined, adaptable and resilient, yet, as the clock ticks ever closer to midnight on Brexit negotiations, the competitiveness and employment we need to get back to growth – green growth – hangs in the balance,” he added.

WTO tariffs would add an average £2,000 to the cost of British-built electric cars sold in the EU, undermining their market competitiveness. The tariffs would also make EU-built electric cars more expensive in Britain, and pretty much cancel out the current government grants.

READ MORE: No-deal tariffs will cancel UK's electric-car grants, SMMT warns

“We’ve already spent nigh on a billion pounds preparing for the unknown of Brexit and lost twenty-eight times that to Covid,” SMMT president and executive chairman George Gillespie said at an online industry event. “Let us not also be left counting the cost of tariffs, especially not by accident.”

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