LONDON (Reuters) – Uncertainty over Brexit has halved new investment in the British car industry as Prime Minister Theresa May’s government current plans for trade after Britain leaves the EU are unrealistic, the biggest car manufacturing lobby said on Tuesday.
Public announcements of fresh investments into new plant, machinery, tooling and equipment, models and model development fell to 347.3 million pounds ($461.1 million) between January and June 21, 2018, down from 647.4 million pounds in the first half of 2017.
“There is growing frustration in global boardrooms at the slow pace of negotiations,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).
“Government must rethink its position on the customs union.”
At stake is the future of one of Britain’s few manufacturing success stories since the 1980s: a car industry employing over 800,000 people and generating turnover of $110 billion.
With only nine months left until the United Kingdom is due to leave the EU, little is yet clear about how trade will flow as Prime Minister May, who is grappling with a rebellion in her party, is still trying to strike a deal with the bloc.
Under the current timetable, both London and Brussels hope to get a final Brexit deal in October to give enough time to ratify it by Brexit day in March 2019, though few diplomats expect the deal to be struck until months later.
The nature of the future relationship with the world’s biggest trading bloc remains unclear and there is a growing sense of nervousness among business leaders about the prospect of Britain crashing out of the bloc without a deal or with a deal that would silt up the arteries of trade.
Around 52 percent of the UK’s total $1.1 trillion trade in goods last year was with the EU so May wants to sign a free trade agreement and negotiate an as yet relatively undefined customs arrangement to ensure as frictionless trade as possible.
SMMT chief Hawes said the British government’s current position – leaving the EU single market and the customs union – would hurt the industry.
The EU customs union clubs the 28 EU members in a duty-free area where there is a common import tariff for non-EU goods.
“The current position, with conflicting messages and red lines goes directly against the interests of the UK automotive sector which has thrived on single market and customs union membership,” he said.
“There is no credible ‘plan B’ for frictionless customs arrangements, nor is it realistic to expect that new trade deals can be agreed with the rest of the world that will replicate the immense value of trade with the EU.”
($1 = 0.7532 pounds)
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