The European Union risks losing about 24 billion euros ($27.5 billion) if the economic bloc does not allow the U.K. to qualify for its proposed “Made in Europe” trade strategy for non-EU nations.
The new impact figure comes from data collected by Oxford Economics, commissioned by the Society of Motor Manufacturers and Traders, or SMMT, the auto industry group revealed in its Sept. 22 release.
The loss of the trading boost, affecting manufacturing in various EU nations and about 250,000 jobs, would also be felt in the U.K. considering its trading relationship with the EU is estimated at 80 billion euros annually.
Both the U.K. and the EU are each other’s largest export market for passenger cars, while EU manufacturers sell more automotive components to the U.K. than to any other global market, said the SMMT.
These benefits will be put at risk if the European Commission’s proposed Industrial Accelerator Act, or IAA, excludes the U.K. from key “Made in Europe” regulations in its current draft, the SMMT pointed out.
This could “put U.K. production at a competitive disadvantage in its largest market, reducing demand for U.K.-built vehicles and, in turn, reducing U.K. sourcing of EU components, goods and services,” it added in the statement.
The biggest hit to Europe’s own automotive economies would be felt by gross domestic product hits to Germany, France, Italy and Spain, at around 6.3 billion euros, 2 billion euros, 1.7 billion euros and 1.5 billion euros. respectively. according to SMMT data.
Jobs, too, would be placed at threat with U.K. output supporting thousands of jobs in each market, including 69,000 in Germany, 24,000 in France, 22,000 in Spain and 20,000 in Italy. The dependency is even more pronounced in Central and Eastern Europe, where U.K. automotive production supports 23,000 jobs in Poland, 14,000 in Romania, 13,000 in Czechia and 11,000 in Slovakia.
“The EU is rightly focused on strengthening its industrial base, but the UK remains fundamental to Europe’s automotive ecosystem and is therefore essential to that ambition,” said the SMMT’s chief executive, Mike Hawes. “Excluding the U.K. from ‘Made in Europe’ would be an own goal, weakening competitiveness, reducing scale and limiting consumer choice,” he added.
