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Letter From The UK: Headed For The Rocks

Letter from the UK

Is The Great British Car Industry Heading For The Rocks?

A few weeks ago, the Conservative Government of the UK called a General Election in the belief they would gain a strong majority in the UK Parliament ahead of the Brexit negotiations. At the time this seemed very likely. The trouble is, they went on to run the most disastrous election campaign this country has ever seen. Overall, they are now in a much worse position to govern than before and that includes their dealings with the EU machine.

Now, with a much weaker hand to play, the British Prime Minister, Teresa May, has flown off to Brussels to give a speech to European Union leaders about one of the consequences of Britain leaving the EU. In this case, it is about EU citizens who live and work in the UK and their British counterparts who do the same in Europe.

All At Sea

It is a storm in a teacup. No reasonable government would kick out working citizens at a stroke but it does highlight something else. British agriculture has become use to a steady flow of migrant or itinerant workers from abroad who seasonally pick produce that can’t be garnered by automation.

The result of this is that the stream of such workers is starting to dry up because they don’t know where they stand. The thing is neither does anyone else. This has repercussions for our motor industry. With the possible exception (so I hear) of the current American administration, our leaders here don’t seem to have a clue what to do. Their solution so far is to keep bailing out the sinking ship of State in the hope that someone will bring along a bigger bucket.

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A recent BBC News article reads: “David Cameron, his Chancellor George Osborne and many other senior figures who wanted to stay in the EU predicted an immediate economic crisis if the UK voted to leave. House prices would fall, there would be a recession with a big rise in unemployment – and an emergency Budget would be needed to bring in the large cuts in spending that would be needed.”

The Car Industry

The car sales industry in the UK and Europe is huge and Britain imports many cars from Europe and similarly exports out our brands. As the UK car industry is almost entirely foreign owned the worry is that the owners, come Brexit time in 2019, will jump ship fearing trade tariffs will make their UK production uneconomic. That would be a disaster for Great Britain. Further, UK car plants also depend heavily on the free movement of components to and from the continent.

The British Society of Motor Manufacturers & Traders are on record as saying that any new relationship with the EU would need to address tariff and non-tariff barriers, plus regulatory and labor issues, all of which “will take time to negotiate.” In short, they don’t think a deal can be sorted out in the next two years and that some form of interim arrangement must be implemented. This could mean, for example, that the UK stay in the single market and customs union until a new, overarching relationship between the two sides is brokered.

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McLaren employees celebrate the 10,000th car from the McLaren Production Centre in Woking, England in December 2016. Photo: McLaren Automotive Limited.

Live In Hope Not Expectation

When asked, the SMMT’s chief executive said it was time to be pragmatic. He went on: “we accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that, in two year’s time, we fall off a cliff edge – no deal outside the single market and customs union and trading on inferior World Trade Organization terms. This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.”

In the typically aggressive manner the British have come to expect from EU negotiators over Brexit, their chief negotiator has said there can be no concessions. This is unhelpful. In general, the attitude of the big cheeses who run the European Union is like that of a child who can’t have its own way. They throw their toys out of the pram. This is not conducive to good business and the car makers, being intelligent and sentient beings and not politicians, know this. And they are worried.

The damage to the British car industry could be immense. There must be a solution and, because the car makers have to think long-term, there has to be one soon. Fortunately living in hope is a British trait. We don’t have any other choice.

Geoff Maxted is a motoring writer, photographer, and author of our Letter From The UK series. Follow his work on Twitter: @DriveWrite