Wednesday, September 23, 2020

No-deal Brexit and Covid threaten ‘double whammy’ for automotive business

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Image copyright PA Media UK and European automotive makers have warned a no-deal Brexit may put a £100bn dent within the area’s automotive business within the subsequent 5 years, including to heavy losses already attributable to Covid-19.A letter signed by 23 commerce teams throughout Europe urges the federal government to make a deal reasonably than default to World Trade Organization (WTO) rules.It says with out one there might be a “catastrophic” rise in tariffs.A authorities spokesperson mentioned it’s “working hard” to reach an settlement.The business has already taken a £90bn hit this yr resulting from Covid-19, the SMMT added.The UK left the European Union on 31 January however will take pleasure in tariff-free commerce with the bloc till the tip of the yr as a part of the transition interval. But fears are rising that each side might be unable to strike a longer-term commerce deal by then.The European Automobile Manufacturers Association (ACEA), which penned the letter, mentioned that securing a commerce settlement by January was an absolute “must” for corporations on each side of the Channel.”Otherwise our sector – already reeling from the Covid crisis – will be hit hard by a double whammy,” mentioned director basic Eric-Mark Huitema.’Bleak’Mike Hawes, head of the UK Society of Motor Manufacturers and Traders (SMMT), mentioned a commerce deal was essential as a result of the UK and EU industries have been so built-in. “These figures paint a bleak picture of the devastation that would follow a ‘no deal’ Brexit,” he mentioned.”The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk.” Industry associations on the continent, together with from Germany, France, Ireland, the Netherlands, Belgium, Sweden, Denmark, Italy, Portugal and Eastern Europe additionally say they fear job losses in their very own nations.Under WTO phrases, vehicles exports would face a 10% tariff, rising to 22% for vans and vans. This would hit automotive makers’ margins and tariff will increase could be handed on to shoppers, impacting demand. Automotive suppliers and their merchandise could be affected too.The SMMT mentioned it may result in £49bn of misplaced enterprise for UK automotive vegetation and £52bn for these throughout the EU by 2025. It referred to as for a free commerce deal that may additionally apply to alternatively fuelled automobiles and automotive parts and “involve zero tariffs or quotas”.A authorities spokesperson mentioned: “We want to reach a free trade agreement with the EU that is based on precedent and recognises the fundamentals of our position as an independent, sovereign country.”We stay dedicated to working arduous to reach an settlement by the center of October, and we look ahead to persevering with discussions this week.”At the same time, we are engaging extensively with the automotive industry about how they can prepare for changes to trade at the end of the transition period when we leave the single market and customs union.”

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