SMMT warns ‘Made in Europe’ plans could threaten €24bn UK contribution to EU economy

Proposed ‘Made in Europe’ rules risk disrupting an automotive relationship in which UK vehicle production supports €24 billion of economic activity and 250,000 jobs across the EU, according to new analysis commissioned by the Society of Motor Manufacturers and Traders (SMMT).

The research, carried out by Oxford Economics, highlights the extent of integration between the UK and EU automotive industries as discussions around the EU’s Industrial Accelerator Act (IAA) intensify.

The UK is the EU’s largest export market for passenger cars, while the EU is also the UK’s largest car export market. EU manufacturers sell more automotive components to the UK than to any other global market, contributing to a cross-Channel automotive trading relationship worth around €80 billion annually.

According to the analysis, UK automotive production supports €24 billion of economic activity across the EU, with its impact extending beyond manufacturing into areas including utilities, financial services and real estate.

UK automotive exports to the EU alone generate €5.6 billion of spending on EU goods and services, supporting an estimated 58,000 jobs and €1.6 billion in tax revenues.

The SMMT has warned that these economic links could be affected if the UK is excluded from key ‘Made in Europe’ provisions being considered as part of the IAA.

Under the proposals highlighted by the industry body, UK-built vehicles could be excluded from incentives available to EU-produced vehicles, including support for greener corporate fleets and CO2 super credits, as well as procurement by EU Member States.

The SMMT argues that this could reduce demand for UK-built vehicles in the EU and, in turn, affect UK manufacturers’ demand for components, goods and services sourced from within the bloc.

Oxford Economics estimated that Germany has the greatest economic exposure to UK automotive production, with €6.3 billion of GDP activity supported by the sector. This is followed by France at €2 billion, Italy at €1.7 billion and Spain at €1.5 billion.

The employment impact is similarly widespread. UK automotive production supports an estimated 69,000 jobs in Germany, 24,000 in France, 22,000 in Spain and 20,000 in Italy.

Central and Eastern European automotive economies also have significant exposure, with UK production supporting 23,000 jobs in Poland, 14,000 in Romania, 13,000 in Czechia and 11,000 in Slovakia.

In Slovakia, this represents as much as 0.46% of total employment, while the equivalent figure in Czechia is 0.24%.

Mike Hawes, Chief Executive of the SMMT, 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 €80 billion 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.”