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May to meet car industry chiefs in Birmingham amid concern over Brexit

May to meet car industry chiefs in Birmingham amid concern over Brexit

Theresa May will meet car industry executives at a summit in Birmingham amid growing concern in the industry about the pace of the Brexit negotiations and the impact of a no-deal scenario on the sector.

On Tuesday the prime minister was due to highlight the potential for low emissions technology but before the meeting the industry’s trade body emphasised that ministers have to ensure that the UK would remain an attractive investment environment post Brexit.

Mike Hawes, the chief executive of the Society of Motor Manufacturing and Traders, said the industry welcomed the focus on cutting emissions but warned that the UK could only be a global leader in the right circumstances.

In a veiled reference to Brexit, he added: “This means creating the right conditions to encourage manufacturers to invest, innovate and sell competitively, and provide the right incentives and infrastructure to take the consumer with us.

“Government must set out a long-term commitment, with a world-class package of tangible support that matches our world-class ambitions.”

The car industry employs 162,000 people in the UK, representing 1% of the entire workforce, and there have been repeated warnings that a no-deal Brexit could mean jobs are at risk because manufacturing components would be likely to attract tariffs.

A briefing paper produced by the House of Commons library on Monday concluded that “most economic modelling” shows that “potential benefits of leaving the EU with no deal over the longer term do not make up for the higher trade barriers”.

One of the examples cited in the paper was the automotive sector, where the car manufacturer Honda has previously warned a select committee that the imposition of tariffs “would make UK manufactured vehicles uncompetitive”.

The event in Birmingham has been organised by the Department for Transport, and would see May announce a £106m funding boost for research and development in green vehicles, new batteries and low carbon technology.

The prime minister said she wanted to put “the UK at the forefront of the design and manufacturing of zero-emission vehicles” and she called “for all new cars and vans to be effectively zero emission by 2040”.

Pro-remain opposition politicians said that May should also have referred to Brexit and the deal she hoped to secure from Brussels. Alison McGovern, a Labour backbencher whose seat includes a Vauxhall car plant, said: “None of the objectives the prime minister is setting out will be deliverable if we crash out of the EU on hard and destructive terms.”

Ministers have been summoned to Downing Street on Thursday to discuss the UK’s preparations for a no-deal ahead of the release of a second batch of official papers detailing how businesses and organisations should respond if the country crashes out of the European Union without agreeing divorce terms.

The second set of papers were expected to raise more serious concerns than the batch released last month, which warned that the cost of credit card payments between the UK and EU would increase in a no-deal scenario and that businesses would have to start planning for new customs checks.

No 10’s preference was to secure a Brexit deal based on May’s Chequers plan, which would see the UK strike a free trade deal with the European Union by agreeing to remain in a “common rulebook” for goods and food, although she has to face down a rebellion by the right in her own party and persuade the EU to sign up.

Last week, Michel Barnier, the EU’s lead Brexit negotiator, had warned that he was “strongly opposed” to the UK’s customs proposal and advised European car manufacturers that they will have to use fewer British-made parts after Brexit.

The Commons library paper said that around 44% of car components used in British car manufacturing come from UK suppliers, which was already below the 55% to 60% normally required in a free trade agreement for automotive goods such as the trade deal the EU has signed with South Korea.

“In order for EU carmakers to benefit from the tariff benefits of the EU-Korea agreement [pdf], only a certain proportion of the services may be provided in a car in a third country. Businesses have to be careful not to use too many parts of Britain in their vehicles in the future,” Barnier said at the time.