Investment in Britain’s car sector fell by more than 70 percent in the first half of the year due to concerns about a disorderly Brexit, an industry body said on Wednesday, warning that leaving the EU without an agreement was the “worst outcome”.
The automotive industry, Britain’s biggest exporter of goods which employs over 800,000 people, is one of the most vociferous opponents of a no-deal Brexit, fearing additional tariffs and bureaucracy could halt production.
Investment fell to 90 million pounds ($109.50 million) in the first half of 2019 compared to 347.3 million pounds in the same period in 2018 and 647.4 million in the first half of 2017, the Society of Motor Manufacturers and Traders (SMMT) said.
“The fear of no-deal is causing investors to sit on their hands,” said Chief Executive Mike Hawes.
“The worst outcome would be no-deal. That’s what they fear, that is why they’re not investing.” Firms have also spent at least 330 million pounds on Brexit contingencies such as securing warehousing space and stockpiling parts in order to mitigate the impact of possible delays to the movement of models and components at ports.
Prime Minister Boris Johnson hopes to secure a new deal with the EU after his predecessor Theresa May failed to get parliamentary approval for her agreement but he is prepared to take Britain out of the bloc without a deal on October 31.
Brexiteers have long argued that Germany, Europe’s biggest economy, which exports hundreds of thousands of cars to Britain, will do its utmost to protect that trade, while the British government under Johnson is now ramping up preparations and has said it could help affected sectors.
Full-year investment, based on new publicly announced decisions on fresh spending, will be boosted by a roughly 1 billion pound move by Jaguar Land Rover to make electric cars in Britain.