The deepening Brexit chaos may have significant ramifications in the UK manufacturing sector, especially in the car industry. According to pro-remain voices, there are real risks of plant closures due to the fact the UK automotive sector is entwined with the rest of Europe and the wider world. Companies such as Toyota and Nissan use the UK as a tariff-free gateway to the rest of Europe.
As an Australian now could be a good time to change your sterling into Australian dollars.
Impact on the little guy
Given the manufacturing process involves hundreds of suppliers from across Europe and the wider world, it is fair to say that the implications of the so-called no deal will be
Many in the automotive industry are warning that should the UK leave without a deal they might be forced out of the UK resulting in job losses in the thousands.
Dr Ralf Speth, chief executive of Jaguar Land Rover says: “We, and our partners in the supply chain, face an unpredictable future if the Brexit negotiations do not maintain free and frictionless trade with the EU and unrestricted access to the single market.
“We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees.”
Dr Speth, stated that the company’s five-year plan would be in jeopardy should the “wrong outcome” occur. By the “wrong outcome” he is referring to a ‘no deal’ Brexit.
He stated: “A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year.
“As a result, we would have to drastically adjust our spending profile.
“We have spent around £50bn in the UK in the past five years, with plans for a further £80bn more in the next five.
“This would be in jeopardy should we be faced with the wrong outcome.”
His warning follows warnings from Airbus and other manufacturing powerhouses that employ thousands of people.
As well as Jaguar Land Rover and Airbus, the Society of Motor Manufacturers and Traders (SMMT) are also sharing the same view.
Chief Executive Michael Hawes speaking at the annual dinner stated:
“We need an ambitious future relationship. One that replicates the benefits of the customs union and the single market. No tariffs, no quotas, no rules of origin. No regulatory divergence. No border checks, and frictionless trade.”
He shared the view of Dr Speth that a ‘no deal’ would be catastrophic.
The SMMT recently conducted a survey where the majority of the automotive supply chain was concerned over Brexit.
Of those surveyed the following opinions were gleaned:
- 74.1% stated a ‘no-deal’ Brexit damages operations
- 68% felt no deal would have a negative impact on their profitability
- 55.55% of firms stated the Brexit process had impacted their operations negatively
- 28% stated no deal would cause job losses
- 8% saw it as an opportunity
UK government ripping itself apart over Brexit
The UK government is disintegrating over Brexit. Prime Minister Theresa May’s minority Conservative government is losing control. She herself comes across as an assistant rather than a leader, and the truth of the matter is she is backed into an unwinnable situation. The will of the people is to leave the EU completely, the same scenario as the ‘no deal’ Brexit.
Most MPs across the House of Commons want to remain in the UK as does Theresa May herself. MPs that have a counterview object to the aspects of May’s EU deal that concede ‘too much’ power to the European Commission the unelected executive body of the European Union.
Many with this view, point out that this is an opportunity that can be used for the good of the country. This is a stark contrast to the damage limitation approach taken by most of the commentariat in political and mainstream media circles.
The nation-state big fear
One of the key reasons people voted for Brexit was the widespread decline in living standards due to Freedom of Movement. A pillar of the European Union that allows people living in member states to live and work in other member states freely. This has given big corporations the power to keep wages and subsequently living stands low.
Together with the fact that national sovereignty is declining, simply adds weight to the pro-leave argument.
This was reinforced in a recent speech given by Angela Merkel, the German Chancellor. She said: “In this day nation states must today – should today, I say – be ready to give up sovereignty.” This adds fuel to the fire for those that want the ‘no deal’ Brexit believing it is the only way to improve living standards and rebuild industries that have vanished due to Globalisation.
How Brexit unfolds remains to be seen. Each new revelation makes all industrial sectors uncertain and this is causing ramifications across the UK and no doubt will for years to come.