Brexit concerns has carmakers on edge

Bloomberg

Prime Minister Theresa May’s chaos-stricken UK government risks slowly suffocating investments for car manufacturers desperate for clarity post-Brexit from a party that calls
itself pro-business.
That’s the stark assessment of Mike Hawes, chief executive officer of the Society of Motor Manufacturers and Traders, who took a jab at May’s widely-debunked promise that there will be extra money to spend from the contributions that Britain stops making to the European Union budget when it leaves the bloc on March 29, 2019.
“There is no Brexit dividend for our industry,” Hawes told the trade lobby. The UK “could see a gradual reduction in their competitiveness, which makes it harder to secure the next model. It’s more like death by a thousand cuts.”
For car businesses the debilitating effects of Brexit won’t be sudden or dramatic but more of a slow drain that will sap an industry that powers about 10 percent of the UK’s economy.
The comments, echoed by
executives from BMW AG, McLaren Automotive Ltd. and, in another key manufacturing industry, plane maker Airbus SE, are raising the heat on May. Her government has been at war with itself for more than a year over what it wants from Brexit — frustrating negotiators in Brussels and exasperating businesses to breaking point.
She has failed to provide any answers on what kind of customs arrangements it will pursue, and these matter enormo-usly to companies with complex supply chains that need to calculate months and years ahead what kind of customs checks and tariffs will be in place.
“The prospect of no deal is real so all businesses can plan for is a hard Brexit,” Hawes said. The government’s “red lines” on Brexit, of being outside the single market and the customs union, “go directly against the interests” of the automotive industry, he said.
In recent days, Airbus and BMW have also warned they may have to back away from the UK if Brexit causes production delays. Investment in new models, equipment and facilities in the UK fell to 347 million pounds ($459 million) in the first half of this year from 647 million pounds a year earlier, as manufacturers held back on making investment decisions the SMMT said.
The malaise has extended to the services industry, which is by far the biggest driver of economic growth and that has been feeling left out of the discussion.