UK Car Industry Investment Halves Due To Brexit Uncertainty

By NickyTCW from Wikimedia Commons

According to the most recent research from the Society of Motor Manufacturers and Traders (SMMT), investment in the motor industry of the United Kingdom has halved during the first half of this year, as the uncertainty regarding the future post-Brexit affects spending.

The turnover in automotive manufacturing rose by 5.3 percent during the previous year, and jobs in the sector increased by 2.8 percent to 186,000.

Meanwhile, the green credentials of the industry were able to improve, with CO2 emissions per vehicle dropping by 9.4 percent and waste to landfill declined by 12.6 percent.

However, during the first six months of the current year, the SMMT reported that the investment has stalled, with only £347.3 million earmarked for new equipment, models, and facilities in the United Kingdom – approximately half the sum that was announced during the same period last year.

The production output has dropped because of the slowing demand in the new vehicle market, and hundreds of job cuts have already been announced, including at Vauxhall dealerships and Jaguar Land Rover across the United Kingdom.

The SMMT said that the government “must take steps to boost investor confidence and safeguard the thousands of jobs that depend on the sector”.

The group called on the government to end the uncertainty regarding the future trading relationship of the United Kingdom with the European Union, and to “commit to continued membership of the customs union and maintenance of the benefits the single market delivers,” or risk impairing the competitiveness of the car industry of the United Kingdom.

The SMMT chief executive, Mike Hawes, stated: “There is growing frustration in global boardrooms at the slow pace of negotiations. The current position, with conflicting messages and red lines, goes directly against the interests of the UK automotive sector which has thrived on single market and customs union membership.”

Hawes said that there was “no credible ‘plan B’ for frictionless customs arrangements.” He said that it was unrealistic to anticipate that new trade deals would be agreed with the rest of the world that would replicate the enormous value of the trade with the European Union.

He added: “There is no Brexit dividend for our industry, particularly in what is an increasingly hostile and protectionist global trading environment.”

He continued: “Our message to government is that until it can demonstrate exactly how a new model for customs and trade with the EU can replicate the benefits we currently enjoy, don’t change it.”

The call for action of the SMMT arrives weeks after the president of the CBI, Paul Dreschler, warned that the motor industry of the United Kingdom faces “extinction” if the United Kingdom leaves the customs union of the European Union.

He stated: “If we do not have a customs union, there are sectors of manufacturing society in the UK which risk becoming extinct.”

Dreschler continued: “Be in no doubt, that is the reality. There’s zero evidence that independent trade deals will provide any economic benefit to the UK that’s material. It’s a myth.”

Recently, US President Donald Trump threatened to impose 20 percent tariffs on European cars as a retaliation for the “unfair” treatment of the European Union of goods from America.

In a statement that was posted on social media, Trump stated: “Based on the tariffs and trade barriers long placed on the US and it great companies and workers by the European Union, if these tariffs and barriers are not soon broken down and removed, we will be placing a 20 per cent tariff on all of their cars coming into the US. Build them here!”