A car industry association, which represents Nissan and other major car makers, has expressed worries over the possibility of a hard Brexit.
The Society of Motor Manufacturers and Traders (SMMT) has stressed that its members need tariff-free access to EU markets in order to avoid a slump that could affect jobs.ย
The SMMT has also, however, expressed doubts that tariff-free access can be negotiated before Brexit talks officially end in March 2019.ย
If this happened, the UK car industry would have to trade with the EU under World Trade Organisation (WTO) rules โ meaning tariffs of almost 10% on manufactured goods.
The Society of Motor Manufacturers and Traders has stated that such a scenario is โthe worst foreseeable outcome for the sector, its employees and the British economyโ and has asked the government to consider staying in the single market and customs union until a deal can be worked out.
Nissanโs Sunderland plant manufactures around 500,000 vehicles a year, many of which are exported to EU countries. The factory employs around 7,000 people, but even more jobs in the supply chain and the general Wearside economy depend on the plant.ย
After Brexit, Nissan appeared to show its faith in a post-Brexit Britain by announcing plans for a massive boost in production at its Sunderland plant, which would create an extra 5,000 jobs.ย
As a hard Brexit began to seem more likely, however, Nissan began to make more ominous noises. ย
Nissanโs senior vice president Colin Lawther said that Nissan would โconstantly reviewโ its decision to increase investment in Sunderland and that the decision was based on โa set of circumstancesโ at a particular point in time.ย
Mr Lawther commented, โAs those circumstances change, we will constantly review the decisions that we take, based on anything that materially changes.โ
Mike Hawes, the chief executive of the SMMT, said, โWe accept we are leaving the European Union and we share the desire for that departure to be a success.โย
โBut our biggest fear is that in two yearsโ time we fall off a cliff edge โ no deal, outside the single market and customs union, and trading on inferior WTO terms.โ
โThis would undermine our competitiveness and the ability to attract the investment that is critical to future growth.โย
โIf the UK cannot secure โ and implement โ a bespoke and comprehensive new relationship with the EU in two yearsโ time, we need a back-up plan.โ
โWe need the government to seek an interim arrangement whereby we stay in the single market and customs union until that new relationship is implemented.โย
As there are deep and complex connections between the UK and EU car industries, any Brexit deal would have to address complicated issues such as tariffs, regulations and relations with the labour force.
North-east Labour MP Kevan Jones recently told Parliament, โIt is vital that, whatever we do with our new relationship with Europe, we protect access to the single market, particularly for regions such as the north east, which depends on exports to the EU.โ
Mr Jones said that the north east โexports ยฃ7 billion of goods to it each year โ 58% of all exports from the north east.โ ย
(Featured image courtesy of Lindsey Turner, from Flickr Creative Commons)
