Britain’s automotive industry is warning that proposed new European Union rules could damage an €80 billion annual trading relationship and put jobs and investment on both sides of the Channel at risk.
New analysis commissioned by the Society of Motor Manufacturers and Traders estimates that UK automotive production supports €24 billion of economic activity and around 250,000 jobs across the EU.
The warning comes as discussions continue over the EU’s Industrial Accelerator Act and proposed Made in Europe provisions intended to strengthen European manufacturing.
The SMMT fears UK built vehicles could be excluded from incentives available to products manufactured within the EU, despite the closely connected supply chains which continue to operate between Britain and the bloc.
Oxford Economics analysis commissioned by the industry body estimates that UK automotive exports to the EU generate €5.6 billion of spending on European goods and services.
That activity is estimated to support 58,000 EU jobs and generate around €1.6 billion in tax revenues.
The UK and EU remain heavily dependent on each other’s automotive industries, with the UK the EU’s largest export market for passenger cars and the EU the biggest overseas destination for British built cars.
EU manufacturers also sell more automotive components to the UK than to any other market outside the bloc.
The SMMT argues that excluding UK products from Made in Europe provisions could reduce demand for British built vehicles and consequently reduce the amount UK manufacturers spend on components and services sourced from EU businesses.
Its analysis suggests Germany has the greatest exposure, with UK automotive production supporting an estimated €6.3 billion of economic activity and 69,000 jobs there.
France is estimated to benefit by around €2 billion and 24,000 jobs, while the figures for Italy are €1.7 billion and 20,000 jobs and Spain €1.5 billion and 22,000 jobs.
The relationship also extends deep into the manufacturing economies of Central and Eastern Europe, with UK automotive production estimated to support 23,000 jobs in Poland, 14,000 in Romania, 13,000 in Czechia and 11,000 in Slovakia.
SMMT Chief Executive Mike Hawes said:
“The EU and UK automotive sectors have traded, invested and grown together over many years.
“Despite Brexit, supply chains remain deeply integrated and the cross-Channel trading relationship is worth €80 billion a year, supporting jobs, growth and investment.”
He said strengthening Europe’s industrial base was a legitimate objective but argued that excluding British manufacturers would weaken rather than strengthen the wider European automotive industry.
Hawes added:
“Excluding the UK from ‘Made in Europe’ would be an own goal, weakening competitiveness, reducing scale and limiting consumer choice.”
The industry body wants UK built vehicles, components and materials to receive equivalent treatment under the proposed rules.
Its argument is ultimately one of mutual dependence.
Five years after the UK’s departure from the EU single market, thousands of vehicles, components and materials continue to move through a supply chain in which the fortunes of British and European factories remain closely connected.
