UK Brexit document could offer respite to the country’s automotive industry

15 November 2018

UK Brexit document could offer respite to the country’s automotive industry

15 November 2018

The UK Government has presented its plans for a Brexit deal with the EU, in a move that could benefit the country’s automotive industry.

The 585-page document agreed by a majority of the Cabinet would see a 21-month transition period come into effect after 29 March 2019, the date the country is due to leave the European Union. In this time, the country would still be governed by EU customs laws, meaning no tariffs or extra checks on imports and exports by manufacturers based in the UK.

The news is not quite a deal on future trading relations with the continent. However, it does provide breathing space for carmakers, during which they can investigate the best options for them following the end of the transition and use the time to build up their market position while selling more cars.

Speaking about the announcement, Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes said: ‘For the automotive industry, Brexit is about damage limitation. The outline agreement is a positive step in avoiding the devastating consequences of ‘no-deal’ and securing a transition period. It is, however, only a first step and business seeks certainty and ambition when it comes to securing a competitive future. Truly frictionless trade is the only way to ensure the industry’s future success, and this should be the objective for all parties as we move into negotiating the permanent UK-EU relationship.’

Andy Palmer, CEO of UK carmaker Aston Martin, told the Financial Times: ‘This deal is night and day better than a no deal Brexit. From that perspective, it’s obvious that we see it meets the needs of all the requests we put forward as an industry and as Aston Martin.’

The company, along with German carmaker BMW, was investigating the possibility of flying components into the UK for its factories, rather than relying on road transport and shipping, methods which may lead to delivery delays should the customs union not be carried forward. Palmer added that he would wait until Parliament had approved the deal before reconsidering these plans.

Voting matters

The document has to be cleared by the UK Parliament. However, there has been opposition from pro-Brexit MPs, who feel that it betrays the ethic that leaving the EU means severing all ties. During the transition period, the European Court of Justice would still govern the country, with a single customs territory being established.

The publication of the document has seen two cabinet ministers, including the Brexit Secretary, resign, while others in the Government are calling for a vote of no confidence in Prime Minister Theresa May. The opposition Labour party, together with other political parties, have also voiced their concerns over the plans.

It, therefore, remains to be seen whether the plans will come into effect. However, with the country committed to leaving the EU in just over four months, it is likely that should the deal be withdrawn, a no-deal situation will become the most likely scenario, something the automotive industry is keen to avoid.