Newspress ‘Made in Europe’ proposals threaten UK Auto’s €24bn contribution to EU economy
The deep integration of the EU-UK auto manufacturing industry is laid bare in new analysis published today by the Society of Motor Manufacturers and Traders (SMMT), showing the EU’s €24bn economic stake in UK automotive manufacturing success. The findings come as EU talks on its Industrial Accelerator Act (IAA) intensify and highlight the importance of the UK to Europe’s vehicle markets and supply chain.
The UK is the EU’s largest export market for passenger cars and vice versa, while EU manufacturers sell more automotive components to the UK than to any other global market in a trading relationship worth €80bn annually. The analysis, carried out by Oxford Economics, estimates that UK automotive production supports €24bn of economic activity across the EU, spanning every sector from utilities to financial services and real estate.
The UK auto sector also sustains 250,000 EU jobs through supply chain activity and wage-funded consumer spending, while UK automotive exports to the EU alone generate €5.6bn of spending across the bloc, supporting 58,000 jobs and €1.6bn in tax revenues.
These benefits will be put at risk if the IAA excludes the UK from key ‘Made in Europe’ provisions. As drafted, future UK-built vehicles would be denied access to incentives available to EU-built products, including support for greener corporate fleets and CO2 super credits, and be excluded from EU Member State procurement, despite the UK’s role in Europe’s automotive supply chain.
Such an outcome would put UK production at a competitive disadvantage in its largest market, reducing demand for UK-built vehicles and, in turn, reducing UK sourcing of EU components, goods and services. It would also mean higher costs and less choice for European consumers at the very time the sector needs scale, investment and affordability to meet competitive challenges and accelerate the transition to zero emission mobility.
The exposure would be felt across Europe’s major automotive economies, with the biggest GDP impacts in Germany, France, Italy and Spain – at around €6.3bn, €2bn, €1.7bn and €1.5bn respectively. That economic risk is matched by significant employment exposure, with UK 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 UK automotive production supports 23,000 jobs in Poland, 14,000 in Romania, 13,000 in Czechia and 11,000 in Slovakia – equivalent to as much as 0.46% of total employment in Slovakia and 0.24% in Czechia, reflecting their more labour-intensive industrial bases.
Mike Hawes, SMMT chief executive, said, “The EU and UK automotive sectors have traded, invested and grown together over many years. Despite Brexit, supply chains remain deeply integrated and the cross-Channel trading relationship is worth €80bn a year, supporting jobs, growth and investment. 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. Excluding the UK from ‘Made in Europe’ would be an own goal, weakening competitiveness, reducing scale and limiting consumer choice. We need a better outcome – one that recognises UK Automotive as a trusted partner in the Industrial Accelerator Act and strengthens, rather than fragments, Europe’s automotive industry.”
