Brexit and the UK Car Industry: Trouble Ahead

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Before the Brexit referendum took place, politicians – including pro-leave campaigners – claimed it would be both possible and desirable to retain our access to the European single market. The fact is that many politicians believed that Europe would be so upset at our leaving that they would still allow access to the single market, but the EU27 countries are now adamant that this is not going to happen. All of this raises the question of why David Cameron proposed such a referendum, without considering that Europe could, quite legitimately refuse us access. The problems that this may cause, particularly for the UK car industry, have not been sufficiently addressed.

What Happens Now?

Just recently, the chief executive of the SMMT (The Society of Motor Manufacturers and Traders) warned the Brexit could mean an end to the motor industry in Britain. A growing number of manufacturers have already stated their intention to move their whole business to Europe if we do not have access to the single market.

Removing some of the country’s major employers from Britain could cause major problems for the economy, with even more people out of work than there were under the Thatcher government. As more than one politician has warned, exclusion from the single market could result in Britain having to pay WTO tariffs, and this would make life even harder for British people.

Knee Jerk Reaction

It is arguably the case, that following the referendum in Scotland, Cameron and others thought than a referendum on the EU would also end up making Britain stronger – contrary to expectations, he was wrong, and the country voted to leave.

The Cost

As trade experts have pointed out, the loss of access to the single market not only means the loss of industry and jobs, but an annual tariff for the country of more than £4.5 billion. The cost is made up from £1.8 billion on exports and £2.7 billion on imports. What this means is that, without access to the single market, people wanting to buy a new car could find themselves paying an additional £1500. The increase, it’s argued, would result from manufacturers’ inability to absorb the extra costs involved in losing access to the single market.

Losing Access

The fact is that a Brexit without access to the single market, which seems increasingly likely, could affect jobs, manufacturing, and the cost of everything, from cars to food. Recently, the government seems to be coming to terms with the fact that the other EU members were not just sabre-rattling when it came to Britain’s access to the single market. In spite of this, and in spite of the problems that could arise from restriction to that access, Theresa May is determined to go ahead with leaving the European Community, regardless of the fact that we will have thousands more unemployed, and years of growth and investment gone to waste. All because, it might be argued, of the government’s knee jerk reaction to the Scottish referendum.