Britain’s Auto Industry In Jeopardy After Brexit No Confidence Vote

Britain's Auto industry In Jeopardy

Parliament’s rejection of Prime Minister Theresa May’s Brexit proposal has increased the chances of a so-called no agreement exit from the European Union (EU) and sparked a chorus of concern from general and automotive industry leaders in particular. But not eaveryone believes that if Britain leaves the EU on March 30 without an agreement, the consequences would be terrible. Because of modern technology, if Great Britain is forced to undertake its foreign trade by returning to the terms of the World Trade Organization, it is unlikely to cause long-term problems. After all, just over 50% of its foreign trade is already done in accordance with WTO rules.

Prime Minister May’s Proposal Rejected

The agreement proposed by Prime Minister May was rejected by Parliament, with an unexpected majority of 432 against 202. The British political experts were stunned by the extent of the defeat and collapsed to understand the consequences. The automotive industry appreciated the plan, as it retained much of the free access to European markets after Brexit, so its just-in-time supply chain remained intact. But politicians did not like the fact that the plan left the European Union with an unassignable power over Britain after Brexit. The big companies were unanimous in expressing their horror. Britain’s main industrial organization, the CBI, has said that if Britain leaves the EU without an agreement, it would have huge negative consequences for the economy.

The vote against the Brexit agreement on the table brings it closer to the no agreement that would be catastrophic for the automotive industry. All parties in parliament must work together to find a solution and put in place the necessary mechanisms. Prevent this and explore alternatives that protect our future, leaving the European Union, Britain’s most important trading partner, without agreement and without a transition period to mitigate the negative effects, would put the automotive sector and jobs at immediate risk. No agreement should be avoided at all costs.

Businesses need certainty, so they need politicians to do everything in their power to avoid irreversible damage to this vital sector. The big British companies and the banking sector of the country have long opposed the exit of the EU, mainly because of the increased uncertainty. Corporate participation in key policy issues has not been impressive. Before the birth of the euro, the single currency of the EU in 1999, big business and the city were categorical: if Britain’s membership failed, it would mean a long-term loss for the economy. But Britain prospered as many other members of the eurozone collapsed.

British Automakers Hoping For the Best

British automakers have always warned that leaving the EU would be a disaster for them. Prime Minister May’s agreement was seen as a way to save lives. Honda, Nissan, Toyota, and Jaguar Land Rover have increasingly stated that they will be hit hard by a no agreement result and may have to take drastic measures. This warning reflects the growing frustration of UK carmakers and manufacturing sector with the inability of a split government and parliament to express its desires in terms of a post-Brexit trade agreement – thus increasing the risk of no agreement.

None of this should be a surprise: a difficult Brexit would be catastrophic for the UK automotive industry, as the SMMT acknowledges, as production will fall, jobs will be lost, and factories will close. The British auto industry needs a Brexit deal that guarantees free and frictionless trade with Europe, unlimited access to the single market and the ability to hire qualified employees from abroad. Brexit uncertainty, coupled with the government’s confused position on motor vehicles, has already seen investment, production and sales fall in 2018. The government needs to develop a plan for post-Brexit trade with which the British car industry can actually do something. Britain’s car market is set for tough times but remains optimistic.

 

 

About Varun Seepathi 40 Articles
With an experience of over 3 years, Varun Seepathi has aided more than 50 medium to small and large firms for foraying into new markets, by increasing footprint in the existing bracket and understanding the ins and outs of these beasts. These beasts are the companies which have been exclusively engaged in materials, chemicals or packaging activities, and have encountered restraints either in the maintenance of P&L or in beating their competitors. He has also authored more than 300 research papers relating to the industry which consist of crucial information such as addressable serviceable market, strategies of players, growth of the market, market size, forecast, market share estimations and winning strategies along with opinions on the same. The “three slope distributor/off-taker evaluation model” currently in use by a lot of multinational companies has also been pioneered by him. A mood driven writer, a professional consultant, and a born explorer, Varun Seepathi is currently working as a full-time consultant. Healthcare, wealth management and information technology are some of the verticals of the industry where he has demonstrated his skills.