CEO Update

Publication of withdrawal plans just the beginning of a long journey

16 November 2018 #CEO Update

Whatever you might think of the withdrawal agreement that the Prime Minister and her team have negotiated, that we finally have progress and a proposal to avoid the devastating consequences of a no-deal Brexit following more than 18 months of debate, discussion and deliberation, is significant.

The withdrawal agreement sets out a lengthy legal framework covering financial contributions, the rights of UK citizens in the EU and vice versa and the thorny issue of the need to avoid a hard border on the island of Ireland. Crucially, the withdrawal agreement also includes a 21-month transition period which would, for the short term, give us some certainty and steps us back from the perils of the cliff edge. Interestingly, this could involve a further extension of the transition should talks on a trade deal go beyond 2020, something that is not without precedent given trade deals generally take many years.

Accompanying the withdrawal agreement is a draft political declaration on the future relationship between the UK and the EU. This is still in draft form and is likely to evolve over the coming days and we will continue to advocate the need for a commitment – on both sides – to frictionless trade. Without this, the just in time supply chains on which our sector depends – indeed, the whole viability of the UK industry – could be put at risk.

Key questions still remain and both documents have many hurdles to clear as they pass through the decision-making processes in the European Union and UK parliament, not to mention the EU27 heads of state. We’ve been clear all along that ‘no deal’ is not an option. The UK automotive industry has grown and developed over the past 40 years in a favourable environment. It has become a global standard-setter in efficiency, high-tech performance and cutting-edge research on a foundation of frictionless trade and an integrated supply chain within the European Union. Any change to that setup would require adaptation and, for our industry, which did not want to leave in the first place, Brexit is ultimately about damage limitation.

To help members mitigate as best they can some of the risks associated with the UK leaving the EU, SMMT recently launched its Brexit Readiness Programme. Five global brands from the legal and accountancy sectors have joined forces with us to offer expert advice and consultancy services to members, including a free helpline, on key Brexit topics. Given the uncertainty is far from over – and both government and industry are continuing “no deal” preparations in case this whole deal yet falls – companies needing further advice on how best to prepare can access the programme online.

The UK car industry craves stability and political ambition to keep it at the forefront of international production and research. There are many challenges to face outside of Brexit – electrification, digitalisation, radical shifts in mobility and the way that we use vehicles to name just a few. The UK must maintain its place as a world leader in all of these areas but that will only happen if the conditions are right. These are incredibly uncertain times but this week does mark tangible progress as we try and safeguard those conditions.

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