Business chief warns of car industry extinction if no deal is reached on customs union

Sebastian McCarthy
Paul Drechsler also said that there is still a lack of clarity over Brexit which is putting off investors
Paul Drechsler also said that there is still a lack of clarity over Brexit which is putting off investors (Source: Getty)

Parts of the UK car industry face extinction if Brexit involves leaving the EU customs union, according to the president of a leading business organisation.

Paul Drechsler, who is set to retire from his role at the Confederation of British Industry (CBI) next week, said that there was "zero evidence" of independent trade deals outside of the EU providing economic benefit to Britain.

In a scathing attack he described the government’s Brexit approach as a "tidal wave of ideology".

Drechsler, who made the comments on the BBC's Today programme this morning, added: "If we do not have a customs union, there are sectors of manufacturing society in the UK which risk becoming extinct."

He also said: "We still haven't got clarity about the future direction, about where we're heading, what will the future relationship with Europe be, at a level of detail that matters for investment."

The stern warning from the boss of the CBI, which speaks for 190,000 businesses, comes a few months after a report by MPs which stated that the UK car industry would be “hugely” damaged by a no-deal Brexit.

Read more: Car industry should pay for costs of pollution, say MPs

A spokesperson for the Department for Exiting the EU (DexEU) said: "We are focused on delivering a Brexit that works for the whole of the UK - including businesses across the economy. We will soon publish a White Paper with detailed explanations of our ambition for a future relationship with the EU – building on the positions set out by the Prime Minister."

Fears for the future on the car industry were sparked earlier on Monday when Britain’s largest car manufacturer, Jaguar Land Rover, announced it would be transferring its production of the Discovery model from the West Midlands to a plant in Slovakia, although the firm insists the move is unrelated to Brexit.

Read more: UK car manufacturing sees April boost

A spokesperson for Jaguar Land Rover said: "Next year we are investing £4.5bn and we have just announced significant investment in the UK manufacturing base as well as a new plant in Slovakia. While I cannot speak for the CBI’s comments, Jaguar has an extremely bright future."

Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: "Free and frictionless trade with the EU has been the foundation of the UK automotive industry’s recent success, with single market and customs union membership creating the conditions needed for our highly efficient ‘just in time’ manufacturing processes."

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