“They need us more than we need them.”
It was an argument often advanced by Brexit supporters in the wake of the UK’s 2016 referendum. The clout of EU business would weigh in Britain’s favour in the negotiations. German cars, French wine, Italian Prosecco, Danish bacon… common sense would prevail and Brussels would ensure that European goods still flowed smoothly into the UK.
But barely three months before the December 31 cutoff date that will sever the current trading system, and with warning sirens now blaring, talks on future arrangements have been in a quagmire. Negotiations resume this week ahead of a make-or-break month of October.
In recent weeks many major European exporters to the UK — as well as their British counterparts who sell into Europe — have sounded cries of alarm. Unless there is a deal, they warn of disruption and higher costs on both sides of the English Channel.
January 1 will bring major changes regardless, with customs and regulatory red tape kicking in once the UK leaves the European Union’s Single Market and Customs Union.
But failure to strike a new trade deal would amplify friction — and this amid the onslaught of the coronavirus pandemic which has already caused devastating hardship.
The EU and UK would trade on World Trade Organization (WTO) terms — bringing tariffs, and access to each other’s markets reduced to an equal footing with all countries in the same situation.
Car industry: ‘Pull out all the stops’
Road vehicles topped the list of EU goods imported into the UK in 2019, according to UK trade figures. They were valued at €53 billion, nearly a fifth of all UK goods imports. Almost half of all UK vehicle imports came from the EU.
In September the European car industry issued a siren call as trade bodies from across the continent called on both sides to “pull out all the stops” to avoid a “no-deal Brexit disaster”.
Pointing out that the sector supports over 14 million livelihoods — one in 15 of EU and UK jobs — the European Automobile Manufacturers Association (ACEA) said a no-deal outcome would mean up to €110 billion in losses to 2025. Nearly half of these would be suffered by UK plants.
CLEPA, the body representing European suppliers and one of the 23 signatories, warned that a “disorderly exit of the UK will exacerbate the stress” amid the economic crisis and the transition to a greener, more automated industry.
“The sector needs negotiators to strike a deal. And equally important, the sector needs a deal that maintains the industrys global competitiveness,” its statement said.
Another signatory was Germany’s car industry body the VDA, which pointed out that its members have more than 100 production sites in the UK.
It has previously said that despite the UK’s importance, the cohesion of the EU Single Market is even more so. According to industry figures, 30% of EU vehicle exports went to the UK in 2019.