EU membership ‘critical’ for UK car industry

Published on Wednesday, 02 April 2014 12:58
Written by Daniel Mason

Access to the single market through membership of the European Union is "critical" to the success of the UK's car manufacturing industry, a report published today has concluded.

The Society of Motor Manufacturers and Traders found in a survey that 92% of companies in the sector wanted to stay in the EU because it would be "best for their business" – while almost 70% said leaving the bloc would have a negative impact in the medium to long term.

Key benefits of membership cited by the report included integrated supply chains, EU innovation funding, the free movement of labour, and the ability to influence harmonised regulations and product standards.

However, the majority of companies also backed calls for reform of the EU, with reducing complexity, encouraging financial reform and the consistent application of regulation among the priorities.

"The position of the UK automotive industry is clear - being part of a strong Europe is critical for future success," said Mike Hawes, chief executive of the SMMT. "This report and our member survey show that Britain's EU membership is fundamental to investment, growth and jobs in automotive companies of all sizes.

"The recent success of the UK automotive sector is due to its global competitiveness; competitiveness that is enhanced by a supportive business environment at home and access to the huge single market."

John Leech, head of automotive at KPMG in the UK, which conducted the research, added: "Our report shows just how important the EU is to the UK automotive market - it is a highly globalised industry and integrated within the EU. This integration gives global manufacturers with facilities in the UK, for example, access to European consumers.

"Our analysis shows that, for the automotive industry, it is not a question of the EU versus emerging markets; they want to do business with both.

"The automotive businesses we spoke to also see the EU as an important bargaining force in global trade negotiations. Moreover, research and development, which is vital to the UK's ability to be at the forefront of innovation in car manufacturing, is both heavily funded by the EU and requires access to the expertise and free movement of skilled engineers within the EU."

The report comes with Liberal Democrat leader Nick Clegg and his Ukip counterpart Nigel Farage due to hold their second debate on the UK's EU membership later today. The prime minister, David Cameron, has promised a renegotiation of Britain's membership terms followed by a referendum in 2017, if he wins the next election.