If there is no free trade deal between the United Kingdom and the European Union by the end of the year, the car industry of the UK could lose 55.4 billion pounds ($74 billion) in tariffs by 2025, the Britain’s car industry body warned on Tuesday.
Therefore the body urgently called on Brexit negotiators to secure a deal by the end of 2020.
It also warned that a no-deal Brexit will also significantly hamper the ability of the industry to develop the next generation of zero-emission vehicles.
UK vehicle production could be reduced by two million units over the next five years if there is a “no deal” Brexit, said the Society of Motor Manufacturers and Traders (SMMT).
“With scant time left for businesses to prepare for new trading terms, the sooner a deal is done and detail communicated, the less harmful it will be for the sector and its workers,” the SMMT said in a statement.
Negotiations between British and EU negotiators are on for clinching a new trade deal by January 1, 2021 – the day when the UK will completely leave the EU. in the eventuality of the two parties not being able to strike an agreement, car makers will have to pay tariffs on parts and vehicles imported and exported into and out of Britain at rates fixed by the World Trade Organization (WTO), it said.
A total additional cost of up to 55.4 billion pounds by 2025 would have to be faced by the British car industry because of the WTO tariffs, over an d above the massive costs they are currently enduring because of the novel coronavirus pandemic, the British car industry group said.
It was just about a week ago that the UK government said the sale of new petrol and diesel cars and vans would be banned by it starting in 2030 as a part of its program of “green revolution” aimed at reducing carbon emissions form vehicles to net zero by 2050.
The cost of British-built electric cars sold in the EU will get increased by an average 2,000 pounds because of the WTO tariffs which will make “UK plants considerably less competitive and undermining Britain’s attractiveness as a destination for inward investment”, the industry group said.
The price of an imported EU-built electric car will cost 2,800 pounds more on the average because of the new tariff regimen which will “all but cancel out” the 3,000 pound zero-emission car subsidy being offered to car makers and customers currently by the UK government, it said.
(Adapted from Reuters.com)