EU withdrawal will help, not hinder, Britain’s automotive industry, according to Westminster think tank Civitas.
The car industry would benefit from an EU exit because an independent UK “could attract more rather than less investment from global car groups” in fast-growing Russian and Chinese markets, says the director of think tank Global Britain, Ian Milne.
His views are supported by Natalie Hamill, EU project director at Civitas, the Institute for the Study of Civil Society.
In 2010, the researchers say, UK exports of cars outside the European Union were worth £9.5 billion, far more than UK exports to the EU26 group, worth £7.8 billion.
European countries are very likely to cut a “mutually advantageous” free trade deal with Britain, especially given their economic problems, says Civitas. The EU supplies 84% of the cars bought in Britain, but absorbs under 60% of those Britain builds, so the logic is that the EU a strong financial incentive to keep trade open.
Europe’s biggest economy, Germany, had a Eu108 billion trade surplus with the UK from 2007-2011, and in 2011 German companies exported 474,000 more cars to the UK than German consumers bought from Britain.
Civitas thinks that flagship German automotive firms BMW and Volkswagen would have especially compelling reasons to lobby their government for free trade. “Not only would their exports to Britain face 10% duties without it, but so too would BMW’s sales of Oxford-built Minis shipped to the EU.”
The policy group argues that investors favour the UK regardless of the status of a single market.
Western European car sales declined for 12 consecutive months up to September 2012, yet Britain saw an 8.2 per cent increase. Despite the UK’s uncertain future regarding the single market, confidence in the automotive sector is high, it claims.
Civitas’ report says the car industry saw over £4 billion of investment in 2011, plus British expansion plans from Jaguar Land Rover, Vauxhall, Toyota and Nissan. Honda’s planned ramp up was curtailed in January with the announcement of up to 800 job losses at the Swindon plant.
However, the authors claim – unsurprisingly, perhaps – that a declining Europe is not driving the success of the UK industry, which employs over 700,000 people and accounts for over 10 per cent of UK exports. They say British [automotive] “industry expertise is world renowned” so attracts global automotive business through its R&D potential, technical prestige and motoring heritage, which outweigh any customs union benefits.
In late January, China’s Geely Automobile Holdings bought struggling London taxi-maker Manganese Bronze.
The report concludes that as the UK ‘imports cheap cars and exports expensive cars’, freedom from ‘the burden of Single Market regulation’ would afford the UK consumer ‘cheaper motoring while the UK-based manufacturers enjoy high margins.