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Thursday, September 29, 2016

Another cost of Brexit?

The reality of Brexit continues to hit home and we havent even left the EU yet, or started the process of leaving for that matter.

The Independent reports on the views of a senior executive at Jaguar Land Rover, who has warned that post-Brexit trade barriers imposed on the UK car industry if the right deal is not reached would "frankly be disastrous".

Hanno Kirner, executive director at JLR, which is owned by Tata Group, based in India, issued the stark warning at a joint Government-industry “Great Britain” event, ahead of the Paris Motor Show:

Mr Kirner was speaking openly for many in the industry, including component makers, who talk privately about the danger of jobs going abroad if membership or strong access to the single market is curtailed after Brexit.

He added that tariffs would add to the cost and the complication of integrated cross-border supply chains and would "damage business and British jobs".

JLR is Britain's biggest exporter of any kind to China. It employs 42,000 directly, and invests £3.5bn a year in the UK.

If Britain failed to conclude a free trade deal with the rest of the EU and was forced to fall back on basic World Trade Organisation rules, British car exporters could face tariffs of up to 10 per cent. Both the Brexit Secretary, David Davis, and the International Trade Secretary, Liam Fox, have in recent weeks conceded that WTO rules for the UK could be the ultimate outcome.

Some 57 per cent of the 1.6 million cars made in Britain find buyers in the rest of the EU. The next largest market is the US (12 per cent), followed by China (7 per cent).

The British car industry is worth £20bn to our economy and is responsible for thousands of jobs. Any threat to its viability is deeply worrying. Let's hope that the Brexiteers can live up to their promises and get us a deal that will protect this investment.
As I understand it, under "hard" or "clean" Brexit, the UK would lose not only tariff-free access to continental markets but also the absence of customs controls. So even if our businesses were not penalised by duties, they would have to cope with increased documentation and other red tape.

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