In a joint letter with their British counterparts, EU automotive representatives said the industry would suffer £100 billion in lost trade over the next five years if Brussels and Britain can’t finalise a future relationship pact. They fear the inevitable introduction of trade tariffs will cause significant price hikes for consumers and cause a huge drop in demand. It was estimated plans to build up to three million vehicles before 2026 would likely be scrapped by carmakers across the Continent.
The letter was signed by 23 auto industry associations, including the European Automobile Manufacturers’ Association and Germany’s Association of the Automotive Industry.
That could cost EU plants £50 billion and UK factories £48 billion, they said.
The industry, which employs some 14.6 million people across Europe, could face “severe repercussions,” they wrote.
The letter said: “Any deal should include zero tariffs and quotas, appropriate rules of origin for both internal combustion engine and alternatively fuelled vehicles, plus components and powertrains, and a framework to avoid regulatory divergence.
“Crucially, businesses need detailed information about the agreed trading conditions they will face from January 1, 2021 to make final preparations.”
Without a trade deal, Prime Minister Boris Johnson has repeatedly said Britain will trade with the bloc with an “Australian-style” arrangement.
This would mean the likely imposition of 10 percent trade tariffs on cars and up to 22 percent on commercial vehicles.
The industry bodies insisted automakers would be forced to pass on the extra costs to consumers, which would drive up prices, reduce choice and lead to a downturn in demand.
Britain’s Society of Motor Manufacturers and Traders also joined the calls for the conclusion of a post-Brexit trade deal.
Its chief executive Mike Hawes said: “These figures paint a bleak picture of the devastation that would follow a no-deal Brexit. The shock of tariffs and other trade barriers would compound the damage already dealt by a global pandemic and recession, putting businesses and livelihoods at risk.
“Our industries are deeply integrated, so we urge all parties to recognise the needs of this vital provider of jobs and economic prosperity and pull out every single stop to secure an ambitious free trade deal now, before it’s too late.”
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Wrangling over the Brexit trade deal is expected to continue this week with Lord Frost, Britain’s lead negotiator with the EU, set to travel to Brussels.
The talks are at risk of collapsing after the publication of a Brexit plan that hands ministers at Westminster the powers to overwrite EU customs checks and state aid regulations in contravention of the Northern Ireland Protocol.
Brussels chiefs have warned they will walk away from the negotiations unless Mr Johnson amends or scraps the Government’s Internal Market Bill before the end of the month.