UK car industry warns 1 in 6 jobs could be lost to coronavirus and Brexit

The UK car industry has called for a financial support package and warned that 1 in 6 jobs could be lost due to coronavirus.

A third of automotive workers are still furloughed, and more than 6,000 UK automotive job cuts have been announced in June as a result of lockdowns, closed markets and shuttered plants, the SMMT said.

The trade group is calling on the Government to address this with a support package for the entire sector to help drive demand and ease cashflow.

Measures including unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence would accelerate a sustainable restart for the market and manufacturing.

Mike Hawes, SMMT chief executive, said: “UK automotive is fundamentally strong. However, the prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid.

“A third of our workforce remains furloughed, and we want those staff coming back to work, not into redundancy.

“The Government’s intervention has been unprecedented. But the job isn’t done yet.

“Just as we have seen in other countries, we need a package of support to restart; to build demand, volumes and growth, and keep the UK at the forefront of the global automotive industry to drive long-term investment, innovation and economic growth.

“Support delivered now is an investment in the future of one of Britain’s most valuable assets… investment that we will repay many times over.”

The body also warned against a hard Brexit from the European Union.

He added: “Covid has consumed every inch of capability and capacity and the industry has not the resource, the time nor the clarity to prepare for a further shock of a hard Brexit.

“That’s why we do need to ‘turbo charge’ the negotiations to secure a comprehensive Free Trade Agreement with the EU that maintains tariff and quota free trade… With such a deal, a strong recovery is possible, we can safeguard the industry and our reputation as an attractive destination for foreign investment and a major trade player.”

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The impact of the pandemic on manufacturing is expected to cut annual car and light commercial vehicle production volumes by a third to just 920,000 units this year.

The SMMT said that with an ambitious, tariff-free FTA in place, full recovery is expected to take up to five years, with output reaching pre-crisis levels of 1.35 million units by 2025.

But the trade group warned that a no-deal scenario would severely damage these prospects and could see volumes falling below 850,000 by 2025 – the lowest level since 1953.

This would mean a £40 billion cut in revenues, on top of the £33.5 billion cost of Covid-19 production losses over the period, the SMMT said.

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