SMMT: No-deal Brexit Likely To Send Car Manufacturing Output Back To 1980s

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According to figures released by the Society of Motor Manufacturers and Traders (SMMT), car production in the United Kingdom dropped for the 10th consecutive month after plunging by 14.4 percent last March.

The major trade association disclosed that production for both home and overseas markets tumbled by double digits, down by 18.1 percent and 13.4 percent respectively.

The group released a warning regarding the impact that the Brexit uncertainty is already having on car production. It also said that the worst-case scenario—the United Kingdom leaving the bloc without a deal—could send the industry back to the “dark days” of the 1980s.

Brexit uncertainty has been prevalent since Britain voted to leave the European Union on 23 June 2016. There has been inadequate progress in the three years since in establishing what a new deal with the bloc will look like, or if the United Kingdom will leave with a deal at all. Originally, Britain was meant to leave the bloc on the 29th of March this year.

By default, if the United Kingdom fails to agree to a new agreement by the deadline for Brexit, then the nation will crash out under a ‘no-deal Brexit.’ Despite Theresa May, the UK prime minister, sealing a deal on the terms of the divorce with the bloc, the UK parliament rejected the agreement several times.

This forced PM May to request the European Union for an extension to Brexit, meaning that the United Kingdom is now scheduled to leave the bloc by the 31st of October at the latest. However, there is still a chance that Britain could leave without a deal.

The SMMT said that if the United Kingdom left without a deal, it would have to trade with the bloc on the rules of the World Trade Organization. It forecasts that the car production in that scenario would “fall around 30% on recent levels to just 1.07 million units by 2021, a level consistent with the dark days of the mid-1980s.”

The chief executive of the SMMT, Mike Hawes, stated: “Despite the extension, the Brexit clock is still ticking and a devastating ‘no deal’ remains a threat. This new period of limbo does not end the havoc for industry, with investment stopped and expensive factory shutdowns moved to avoid a Brexit deadline that has itself now moved.”

He added: “Just a few years ago, the industry was on track to produce two million cars by 2020 – a target now impossible with Britain’s reputation as stable and attractive business environment undermined.”

He continued: “All parties must find a compromise urgently so we can set about repairing the damage and diverting energy and investment to the technological challenges that will define the future of the global industry.”