UK, EU Auto Sectors to Lose Over $140Bln in Case of No-Deal Brexit, Trade Association Says

MOSCOW (Sputnik) - The so-called no-deal Brexit would cost the pan-European automotive sector about 110 billion pounds ($141 billion) over the next five years, the Society of Motor Manufacturers and Traders (SMMT) said in a statement on Monday, calling on both London and Brussels to take action to avoid such scenario.

"Negotiators on both sides must now pull out all the stops to avoid ‘no deal’ at the end of the transition, which according to new calculations would cost the pan-European automotive sector some €110 billion in lost trade over the next five years, putting jobs at risk in a sector that supports 14.6 million livelihoods, representing one in 15 of EU and UK jobs," the press release said.

The appeal was also signed by 23 other regional car industry associations, including the European Automobile Manufacturers Association and the European Association of Automotive Suppliers.

EU and UK automotive leaders warned of a potential second devastating blow if the sides do not reach a trade deal in just 15 weeks left before the end of the transition period after the industry has already suffered around 100 billion pounds worth of production lost this year due to the coronavirus crisis.

"Without a deal in place by 31 December, both sides would be forced to trade under so-called World Trade Organisation (WTO) non-preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks. Such tariffs – far higher than the small margins of most manufacturers – would almost certainly need to be passed on to consumers, making vehicles more expensive, reducing choice, and impacting demand. Furthermore, automotive suppliers and their products will be hit by tariffs. This will make production more expensive or will lead to more imports of parts from other competitive countries," the press release added.

The United Kingdom left the European Union in January but remains under the current EU trade terms. However, if no trade deal is secured before the so-called transition period expires on 31 December, the World Trade Organization's rules for both parties will come in effect starting 2021, including customs tariffs and full border checks for UK goods entering the European area. The sides have been engaged in talks to secure a trade deal but have both pointed to the lack of progress in the negotiations.