Car manufacturers could face tariffs worth £1.2bn a year after Brexit

14 January 2016

The UK car industry could be stung with export charges worth £1.2bn a year if Britain leaves the EU, threatening the future of an industry that supports nearly 800,000 British jobs.

If Britain lost access to the Single Market, it is likely that manufacturers, who exported £11.9bn worth of cars to the EU in 2014 would suddenly face the same 10 per cent tariff on their exports to the EU as their counterparts in the US and Japan. The average cost of an exported UK-made car is now £21,800, meaning manufacturers could be charged £2,180 per vehicle.

The car industry accounts for around 10 per cent of Britain’s trade in goods and in 2014 supported almost 799,000 British jobs. It has been a rare bright spot for the British economy in recent years, thanks in large part to the fact that, as a report by KPMG found, that 49 per cent of UK-produced vehicles are sold to countries in the single market.

A poll by the Society of Motor Manufacturers and Traders in 2014 found that 92 per cent of automotive companies think Britain is stronger and safer in Europe, and car manufacturers have said that being in Europe is critical for them. This week, BMW added its voice to those warning of the risk of Brexit.

Alan Johnson MP, Chair of the Labour In for Britain campaign, commenting ahead of a visit to Ford Dagenham, said:

“Many carmakers have gone public with clear reasons in support of Britain remaining in the European Union. The prospect of tariffs on exports to Europe will alarm carmakers in Britain and will put off new entrants from setting up here, robbing us of crucial investment and growth.

“Leaving the EU would threaten the success of an important British industry which employs around a million people. Even if an isolated Britain outside the EU managed to scratch together a trade deal with our former partners, our position would be weaker which would be bad news for British workers and the British economy.”

Jude Kirton-Darling MEP, Labour MEP for the North East said: “As a region the car sector is a major part of our economy and the idea of any sort of tariffs or barriers to trade is a nightmare scenario for the North East. In the meantime this level of uncertainty is bad for business. We believe that our membership of the EU allows businesses to grow and create the jobs we badly need in this region.”

Paul Brannen MEP, Labour MEP for the North East said: “Access to the European single market, the biggest market in the world, is vital to the North East and it comes with membership of the EU. Norway, who aren’t even members of the EU pay to get access to that market. We mustn’t turn our back on Europe.

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