Hard Brexit Could Cost U.K. Auto Industry $63,750 a Minute
Hard Brexit Could Cost U.K. Auto Industry $63,750 a Minute
(Bloomberg) -- Britain’s automotive industry stands to lose 50,000 pounds ($63,750) a minute should the country crash out of European Union without a deal because friction at the border will leave plants starved of parts, the U.K.’s car industry lobby said.
Without a Brexit deal, the industry’s just-in-time production model would collapse, with a negative impact of 70 million pounds a day in a worst-case scenario, the Society of Motor Manufacturers and Traders said in a release Tuesday.
With Boris Johnson the favorite to succeed Prime Minister Theresa May, the likelihood of a hard Brexit has increased. The former foreign secretary has said he will take the country out of the bloc on Oct. 31, with or without an agreement to smooth the process.
“No deal remains the clear and present danger,” Mike Hawes, chief executive officer of the SMMT, told business and government officials attending an automotive summit in London. “The next PM’s first job in office must be to secure a deal that maintains frictionless trade. We don’t have the luxury of time.”
By contrast, securing a favorable deal with the EU could deliver a 20 billion-pound boost to the U.K. auto industry, according to the SMMT.
Britain’s renaissance in carmaking is already under threat as manufacturers scale back operations in the country. Ford Motor Co. is planning to close a U.K. engine factory as the last major step in an overhaul of its unprofitable European operations. Honda Motor Co. is shuttering a plant in Swindon near London employing 3,500 workers, while Nissan Motor Co. no longer plans to build the X-Trail sport utility vehicle in Sunderland, northern England.
Planned shutdowns after the initial March 29 Brexit date saw output during April plummet by 45% compared to a year earlier, SMMT figures showed, while consumer demand has been continually declining amid the uncertainty.
To contact the reporter on this story: Andrew Noël in London at anoel@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Elisabeth Behrmann, Thomas Pfeiffer
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