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SMMT warns no-deal Brexit presents “existential threat” to automotive industry

Car factory production line

A no-deal Brexit “presents an existential threat” to the UK’s automotive industry, the SMMT has warned new Prime Minister Boris Johnson.

The UK is currently due to leave the European Union on October 31, with Johnson saying this will happen “come what may”.

No deal is currently in place and many businesses and trade organisations have warned of the negative effect a no-deal Brexit will have on the UK’s economy.

This includes the Confederation of British Industry, which has warned neither the UK or EU is ready for a no-deal Brexit.

PSA Group today said it could move all production from Vauxhall’s Ellesmere Port factory if Brexit makes it unprofitable.

To stress the importance of a deal, SMMT chief executive Mike Hawes has sent a letter to Johnson saying the automotive industry contributes £18.6 billion to the UK, employs hundreds of thousands of people and makes the most significant contribution to UK trade of any manufacturing sector.

Hawes wrote: “A no-deal Brexit presents an existential threat to our industry.

“We are highly integrated with Europe, and a no-deal Brexit would result in huge tariff costs and disruption that would threaten production, as well as further undermining international investors’ confidence in the UK.

“We need a deal with the EU that secures frictionless and tariff-free trade.

“No deal Brexit is simply not an option.”

The letter said the UK automotive sector remains strong, with high levels of productivity, a skilled and flexible workforce, with first-rate research and engineering facilities.

Hawes added: “Automotive is, however, a highly competitive sector internationally, with fine margins. We cannot afford to be complacent, and we need the right policy, business and trading environment if we are to thrive.

“Government must continue to work in partnership with the sector, through the industrial strategy, focusing on those actions that will deliver the greatest benefits to our industry and the UK as a whole.

“This means supporting the transition to zero emission vehicles by investing in charging infrastructure, increasing consumer incentives and securing a gigafactory in the UK to help retain a globally advanced supply chain.

“We must make the UK the most attractive destination for investors, creating an internationally competitive business environment and developing skills in new digital technologies.

“Above all we must ensure the sector continues to enjoy – without interruption – preferential trade with critical markets around the world, including the EU.”

He added: “We cannot, however, continue to deliver these benefits, or take advantage of new opportunities, if the UK leaves the EU without a deal.”

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