Brexit—UK’s plan to cut ties with the EU—will impact the former negatively in many ways, but its effects will be much worse if Britain exits without a deal.
UK’s Society of Motor Manufacturers and Traders (SMMT) has particularly cautioned that a no-deal quit would deteriorate the nation’s motor sector by over £40bn in manufacturing costs by 2024.
Britain produces cars which it exports to the rest of the world. If the UK acts out of World Trade Organization regulations, it will compromise such dealings and reduce production rates by nearly 1.5m vehicles in the coming five years.
To act against WTO regulations, the United Kingdom must have (1) exited the EU without an agreement or (2) waited until the Boris Johnson’s Withdrawal Period runs out of tarmac.
The SMMT further explained that the findings of their new studies show tariffs—predicted to pile up as a consequence— could skyrocket expenses to £3.2billion per annum.
A reduction in demand and the idea of international companies taking manufacturing to other nations would lead to a drop in Britain’s motor sector production to 1 million cars every year from 1.3 million at present.
The rain started falling on the UK’s vehicle industry with the dawn of the Brexit agenda. Earlier, production was ever on the up, hitting the highest point in 2016 at 1.7 million. At that time, the sector was looking at over 2 million vehicles by 2020.
Jobs at Risk
But the effects of a stalemate Brexit could go beyond reduced production and losses in billions of euros. The Society of Motor Manufacturers and Traders warns of severe unemployment affecting more than a thousand Britons. UK’s vehicle industry hires over 160,000 experts.
SMMT calls for a Deal before Exit
As part of the efforts to rescue the car production industry, the SMMT requested the government to work towards an agreement that will “eliminate tariffs, allow for friction-free trade, stays in compliant with existing regulations, and maintains access to expertise from all corners of the world.”
According to the body’s CEO, Mike Hawes; “the growing pains of Britain’s car sector are clear: smooth tariff-free trade in line with existing regulations and continuous access to expertise.”
For the automotive sector and Britain as a whole, a deadlock Brexit would mean losses in billions. Tariffs will mean expensive international deals across various sectors, and not just in the vehicle industry alone. Hopefully, the UK will strike a deal before quitting the Union.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks, and scrutinizes Worldpay reviews to understand the payments ecosystem. He enjoys eating pie in his backyard porch, as should all right-thinking people.