Many changes are expected to come as the UK stopped following European Union rules from January 1, 2021. Boris Johnson, the prime minister of the United Kingdom hailed it as a ‘Freedom’. The UK has attained its freedom but at what costs is what we still await to see. The repercussions of Brexit can facilitate and can let down different industries. The Automotive industry in particular is the most considerate industry in all the deals. The United kingdom’s automotive sector adds stellar value to the UK’s economy. It produces 12% of total exports and an £82 billion turnover. About 800,000 people are directly or indirectly employed in the UK’s motor industry. Therefore, the UK’s automotive industry is an asset to the UK and Europe.
The Pros and Cons of Brexit for the UK’s Automotive Industry are:
Tariffs
The European Union under the EU’s World Trade Organization commitments will treat the UK exports the same as other third countries. 53% of pre-assembled cars of the UK and 69% of components built in the UK were expected to be imported to the European Union with a 10% tariff to cost £1.8 billion. But the EU-UK trading agreement has implemented a zero-tariff trade in goods and services. This is the biggest breakthrough for the automobile companies who were afraid of a hard no-deal Brexit.
Losing the EU FTAs
The European Union held the biggest market share in the UK’s automobile exports with 54.8%. The UK has benefited from the power of demand within the European Union. But with the formal implementation of Brexit, there is a prospect of distortion in the stats. The EU-UK trade deal has, however, divulged the doors and smoothened the path for trade but the UK’s bilateral relations with third countries are posing a threat to EU countries. The UK is trying to secure its deals with other potential countries like the United States of America, India, Turkey, Japan, and China. This approach of the UK can be seen as threatening to the countries in the European Union which leads to curtailing the market share.
Delayed Delivery
The vehicles made in the UK are not completely of UK origin. One part comes from Germany, the other from France and so on. Due to the boundary barriers, there will be a delay in the delivery of components coming from the European Union. The component suppliers face many penalties due to delayed delivery of the component. This will halt the customs compliance and commercial contracts. Therefore, most people will avail of cheap van leasing deals in the UK, rather than demanding a new car, that is not even in stock.
Employment
At least 10% of people employed in the automobile industry are from other places in the EU, but can be more at the individualistic level. According to the UK-EU deal, the free movement of people is restricted. This has made it difficult for the labor of this industry. It means that automobile industries will have to rehire to fill the gaps. Therefore, access to a qualified workforce will constrain.
Kommentare