British motor industry could be crippled by no-deal Brexit, experts warn

Industry leaders said the UK could expect billions of pounds in tariffs

The Ford Focus is one of the UK's best selling cars but the company may quit the country in the event of a hard Brexit. Reuters

A no-deal withdrawal from the European Union could cost the UK’s automotive manufactures £50,000 a minute – Dh235,000 – because of production delays, industry leaders have said.

The backlash would push the UK out of the global top 10 exporters and bring about billions of pounds in tariffs when the economy was already feeling the strain, warned Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT).

Experts warned that any government pursuing a no-deal Brexit would also find it very difficult to be re-elected.

The UK is set to leave the EU on October 31, having already postponed the exit date twice earlier this year. Parliament has rejected the government’s withdrawal agreement three times, which has led to the departure of Prime Minister Theresa May.

Boris Johnson and Jeremy Hunt, the men in the race to take over, are currently engaged in two weeks of meetings to woo party members of the ruling Conservatives.

The favourite, Mr Johnson, has vowed to take Britain out of the world’s largest trading bloc by the end of October even if a divorce deal has not been struck, a prospect that business leaders fear could lead to disaster.

“No deal remains the clear and present danger. We are already seeing the consequences of uncertainty, the fear of no deal,” Mr Hawes told industry leaders at a London conference.

Some car companies have decided to move factories or downsize UK operations because of Brexit.

“The next PM’s first job in office must be to secure a deal that maintains frictionless trade because, for our industry, ‘no deal’ is not an option – we don’t have the luxury of time,” he said.

Mr Hawes said trade with Europe was the “bedrock” of the industry as he called for frictionless borders that allows for the easy movement of goods.

He said the automotive business was in a position to prosper, given that it had rebounded since the financial crisis a decade ago, but only if good trading terms were retained with the EU.

“Leaving the EU without a deal would trigger the most seismic shift in trading conditions ever experienced by automotive, with billions of pounds of tariffs threatening to impact consumer choice and affordability,” the SMMT said in a new report.

Mr Hawes was speaking alongside Professor Anand Menon, of King’s College London, the director of UK in a Changing Europe.

He warned that any government that decided to crack on with a no-deal Brexit would become unelectable because of the backlash.

Mr Menon also rubbished claims by Mr Johnson that if a no-deal happened there would still be a transition leaving period in which to continue negotiating with Brussels.

“Just ponder this sentence: On November 1 we will not know exactly and for certain on what terms we are trading with our largest trading partner. Reflect on that for a moment. It is a staggering statement,” he said.