New research reveals four-fifths of UK automotive businesses fear a no-deal Brexit would have negative consequences
One in three UK automotive businesses are cutting jobs amid fears of a no-deal Brexit doing damage to the industry, up from one in eight when the question was last asked in November 2018.
A survey of members of the Society of Motor Manufacturers and Traders (SMMT) also found 80.3 per cent of UK automotive firms fear leaving the EU without a deal would have negative consequences for their future prospects, with 79.6 per cent worried about an impact on their profitability and 62.2 per cent concerned for their ability to win overseas business.
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In preparation for the possibility for a no-deal Brexit – which the SMMT says would reduce the industry’s economic contribution by £50,000 a minute – 73.2 per cent of firms have taken active measures, such as stockpiling supplies to try and mitigate against potential delays at the border. A third, meanwhile, have made adjustments to logistics and shipping routes, while 26.8 per cent have invested in new customs infrastructure.
In fact, the SMMT says the mere threat of a no-deal Brexit has already hurt the industry – 11.8 per cent of its members have divested from their UK-based operations, while 13.4 per cent are relocating operations overseas. In total, 77.2 per cent believe there has already been a negative effect.
Separate research by the SMMT has previously suggested UK automotive firms have spent £500 million on mitigating some of the major risks of a no-deal Brexit, but the organisation has said “many [companies] will not survive” the application of a 10 per cent tariff on finished vehicles.
Mike Hawes, chief executive of the SMMT, said: “Damage has already been done – investment is haemorrhaging, competitiveness being undermined, UK jobs cut and vast sums wasted on the impossibility of preparing for no-deal. Make no mistake, every day no-deal remains a possibility is another day of lost investment, another day that makes it harder to recover investor confidence in the UK.
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“As yet, the damage is not irreversible. But we need a deal. A deal that, in the short term, enables a ‘business as usual’ transition for as long as it takes to negotiate and implement the future trading relationship.
“In the longer term, that deal must replicate all of the benefits we currently enjoy, which means an ambitious deal that delivers free and frictionless trade. UK jobs, innovation, trading strength and economic growth all depend on the automotive sector, so we urge all parties to get a good deal done before it is too late.”
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