Vauxhall-maker bosses to meet UK minister to discuss claims Brexit rules could destroy car industry - business live - The Guardian

Rabu, 17 Mei 2023

Vauxhall-maker bosses to meet UK minister to discuss claims Brexit rules could destroy car industry - business live - The Guardian

From 1h ago

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We kick off the day with news that UK business secretary Kemi Badenoch is set to meet with bosses from Stellantis – the maker of Vauxhall, Peugeot, Citroen and Fiat – amid concerns that the car industry will struggle to meet new Brexit rules over where parts are sourced, due to in part to a weak domestic supply chain and surging inflation.

The carmaker has the rules could force it to shut some of its UK operations, putting hundreds of jobs at risk.

Those rules, which come into force next year, state that, unless manufacturers source 45% of the value of electric car parts from the UK or EU, their vehicles will be subject to a 10% tariff.

Cars at the Vauxhall plant in Ellesmere Port, Cheshire.

But Stellantis says carmakers are struggling to source those parts within the UK and EU.

That is due in part to a lack of UK battery plants and a strong domestic supply chain, while there have been speedier developments elsewhere. They are also being hit by a surge in the costs of raw materials.

Stellantis bosses have said that the prospect of not meeting those origin rules, and being hit with 10% tariffs, will make the industry uncompetitive.

So what to do? The company is set to discuss the matter with Badenoch later today to explore some solutions, which could include reviewing arrangements for manufacturing parts in Serbia and Morocco.

There may be a push to influence ministers ahead of plans to renegotiate the trade deal in 2025, which was part of the original pact between the UK and the EU signed by Lord Frost in December 2020.

Elsewhere…we’ll be keeping an eye on the British Chambers of Commerce Annual Conference, where we’re expected to hear from chancellor Jeremy Hunt, Bank of England Andrew Bailey and Labour leader Keir Starmer.

Stay tuned!

The agenda

10am BST: Eurozone CPI (final) for April
13.30pm BST: US housing starts for April
2.15pm BST: Treasury committee to question HMRC tax chiefs on abuse of tax reliefs in the UK tax system
AGMs: Deutsche Bank, Greggs, and Aston Martin

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An economics academic has warned there is an “existential threat to the UK car industry”.

David Bailey, professor of business economics at the Birmingham Business School, told the BBC Today programme that the stricter rules and increased tariffs set to come into force next year would put British manufacturers at a competitive disadvantage:

I think there is a kind of existential threat to the UK car industry.

The rules in the Brexit agreement don’t help the UK car industry either. If they can’t meet those rules, they’ll face a 10% tariff on cars made in the UK and exported to the EU and vice versa. That will put the UK at a competitive disadvantage.

He added:

Car makers have been saying for some time, they can’t meet those rules as they tighten up, and they’re going to potentially be facing tariffs.

A bit of background about Stellantis, which is the fourth-largest automaker in the world.

Its brands include Vauxhall, Peugeot, Citroën, Fiat, DS, Jeep, Alfa Romeo, Maserati, Abarth and Fiat Professional brands in the UK, and it employs more than 5,000 people in the UK, including at two manufacturing sites: Ellesmere Port and Luton IBC.

Stellantis’ Ellesmere Port site is currently being redeveloped to build its fleet of small electric vans, including the Vauxhall Combo, Citroën Berlingo, Peugeot Partner, and Opel Combo.

The company says it’s moving towards becoming 100% electric, which is why the sourcing of its electric car parts that are affected by the Brexit trade deal, are said to be so important.

Labour party leader Keir Starmer has weighed in, telling BBC Breakfast that the issues being raised by Stellantis are yet another sign that the Brexit trade deal needs to be improved.

Stellantis has said it is unlikely to be able to keep its promise to make electric vehicles in the UK without changes to the trade agreement with the EU.

The Labour leader said there were may “barriers” that needed to be reviewed in any update the the Brexit deal, and said that a future Labour government would aim to “make things here in Britain” to ensure a strong domestic supply chain.

Starmer said:

Look, we’re not going to re-enter the EU. We do need to improve that deal. Of course we want a closer trading relationship, we absolutely do. We want to ensure that Vauxhall and many others not just survive in this country but thrive.

Because there are jobs bound up, there are families watching this morning either employed by Vauxhall or a similar place who are deeply worried about what this means.

So yes we need a better Brexit deal. We will make Brexit work. That doesn’t mean reversing the decision and going back into the EU but the deal we’ve got, it was said to be oven-ready, it wasn’t even half-baked.

So of course we’ve got to repair that along with all the other things we’ll have to repair if and when we are privileged to come into government.”