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UK car industry calls for support package, warns on risks of no-deal Brexit

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UK car industry calls for support package, warns on risks of no-deal Brexit

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One in six auto sector jobs at risk of redundancy

No-deal Brexit could threaten recovery

London — The UK auto industry has called for a dedicated restart package to help protect jobs, citing a survey showing that up to one in six jobs in the sector are at risk of redundancy.

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"More than 6,000 UK automotive job cuts have been announced in June, a result of global lockdowns, closed markets and shuttered plants," the Society of Motor Manufacturer and Traders said June 23.

SMMT carried out a member survey this month which garnered 290 responses delivering 239 individual company responses, representing a combined GBP77 billion ($96 billion) turnover and 148,917 permanent employees.

While showrooms in England and Wales are now reopening and production lines restarting, reduced demand and social distancing are slowing productivity, the group said.

"With a third of automotive workers still furloughed, the end of the government's job retention lifeline in November highlights the critical need for a dedicated restart support package to safeguard these jobs," SMMT said.

SMMT is calling on the government to launch a support package for the automotive sector, citing potential measures such as unfettered access to emergency funding, permanent short-time working, business rate holidays, VAT cuts and policies that boost consumer confidence.

"The prolonged shutdown has squeezed liquidity and the pressures are becoming more acute as expenditure resumes before invoices are paid," said Mike Hawes, SMMT's chief executive, in a statement.

"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," he added.

The threat to jobs is exacerbated by the prospect of a "no-deal" Brexit, SMMT warned.

The UK government confirmed earlier this month it would not seek an extension to the Brexit transition period, which ends in December opening up the prospect of the UK leaving the EU without a trade deal in place if negotiations in the interim are unsuccessful.

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

"With an ambitious, tariff-free FTA [free trade agreement] 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," the group said.

But, it added, "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 GBP40 billion cut in revenues, on top of the GBP33.5 billion cost of COVID-19 production losses over the period, SMMT said.

"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," Hawes said.

"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," he added.