Brexit Outlook Bleak for U.K.’s Auto Industry

A grim assessment of the U.K.’s impending exit from the European Union concludes that Brexit offers no advantages for the country’s auto industry, regardless of the final trade terms that emerge.

Bloomberg News says the bluntly worded analysis released today by the 11-member, cross-party Business, Energy and Industrial Strategy Committee (BEIS) opines that trade talks between Britain and the EU are nothing more than “an exercise in damage limitation.”

The panel urges government to recognize that reality and take a pragmatic approach to limiting the damage. The U.K. is scheduled to quit the EU 12 months from now.

As an EU member, the U.K. enjoys tariff-free trade with continental Europe. With a so-called “hard” Brexit, such goods could be taxed as much as 10%. BEIS notes that profit margins in the auto industry are typically only 2%-4%, so at least some production in the U.K. would become unsustainable.

Bloomberg says BEIS could find no advantage in abandoning current EU regulations. The panel urges government to attempt to preserve as much of the existing policies as possible. But earlier this week Prime Minister Theresa May flatly rejected a detailed EU proposal for the U.K.’s withdrawal. The British government continues to debate its own plan.