The 海角视频 government likes to boast that the 海角视频’s auto industry is undergoing something of a revival, in assembly terms at least. Indeed the 海角视频’s auto sector has experienced investment on an unprecedented scale of late. This has come on the back of a major upturn in auto assembly in the 海角视频 – up by over 50% from a low point of around a million cars in 2009 - combined with changes in economic fundamentals which are encouraging firms to build more cars here and to source more components locally.
Remarkably, over £8bn has been invested by major auto assemblers over the last 3 years. It’s hoped that the industry will – by 2020 – overtake its historical peak level of output of 1.92 million cars (a record set back in 1972).
At the same time, the 海角视频 government will hold an ‘In-Out’ referendum at some point over the next few years.
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The impact of EU membership on the 海角视频’s auto industry was explored in a recent 海角视频 in a Changing Europe event organised by the Aston Centre for Europe (ACE) and the Aston Business School. Participants heard a mix of views, with arguments in favour of continued EU membership, and also of exit.
Those in favour of continued membership of a reformed EU, including Mike Hawes of the Society of Motor Manufacturers and Traders (SMMT), John Leech of and Tony Burke of pointed to what they see as significant benefits for the 海角视频’s auto industry from staying in the EU, particularly in relation to investment, growth and job creation (all the things that the 海角视频’s auto industry has been enjoying of late).
Other voices, notably Alex Storey from Business for Britain, and automotive journalist Neil Winton, argued that the 海角视频 auto industry would do continue to do well outside the EU.
The pro-EU membership argument stresses that EU membership boosts both the attractiveness of the 海角视频 as a place to invest, and the competitiveness of the domestic automotive industry. Not surprisingly, it notes that access to the Single Market is fundamental to 海角视频 auto manufacturing, thereby supporting sales and facilitating supply chain growth.
Those pro Brexit, like Neil Winton, argue that if Britain left the EU “it would quickly (within hours?) negotiate a free trade deal with little difference to the current arrangements”.
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That’s probably correct; a trade deal with Europe would probably indeed be done. But a second, more powerful argument centres on regulations and standards. Those in favour of continued membership highlight that the 海角视频 needs a powerful voice at the EU level to make sure that the specific needs of the 海角视频’s auto industry are considered.
Over 50% of 海角视频 auto exports go to the EU, so even if the 海角视频 were to leave and maintain access to the Single Market, producers in the 海角视频 would still have to meet European regulations so as to sell into Europe.
That would mean having to anyway follow European regulations rather than helping to shape them, which might mean German of French firms shaping them for their own benefit.
At the moment, it’s argued that 海角视频-based niche firms like Bentley, and can benefit from the British government having a seat at the table when regulations are thrashed out that impact on the industry. They would lose that voice if the 海角视频 was no longer a member.
On that, the 海角视频’s auto industry has actually benefited from the government managing to soften tough EU carbon emission regulations for its smaller niche manufacturers.
Again, the pro-Brexiters like Neil Winton are sceptical of this argument, pointing to how the likes of and Mercedes are “hugely successful in the US and China, with no say in the politics at all” (although it should be noted that China has tended to follow the EU’s own ‘euro’ standards on engines over time).
Those supportive of the EU membership point to EU bargaining power in trade negotiations being critical to improving access to international growth markets, thus helping major exporters such as Jaguar Land Rover, and in ensuring mutual recognition of standards.
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Pro-Brexiteers argue that the 海角视频 acting alone could anyway more quickly cut its own trade deals with other countries than an EU that has to please 28 countries. That’s probably the case but some critical issues would remain on ensuring mutual recognition and greater regulatory convergence across technical standards and approvals procedures (the SMMT cites CEPR work suggesting that transatlantic auto regulatory divergences are equivalent to a tariff of 26%).
It was interesting that at the Aston event new technological opportunities and challenges around autonomous cars and data protection were highlighted in the European context by discussants, both in terms of standard setting for new technologies and in maintaining access to research networks developing such technologies.
The latter point relates to some other arguments for remaining in the EU, such as on ensuring access to EU funding and research networks that has supported R&D and innovation at businesses and universities in the 海角视频, and the free movement of labour which enables 海角视频-based firms to combine domestic and international talent (which was seen as especially important by some at the event given skills shortages in the 海角视频 industry).
Of course, that doesn’t mean that the EU can’t be improved, such as through the simplification of regulations and reducing complexities for firms operating in the EU, something that those in favour of continued membership were keen to stress.
Overall, the debate on the importance of EU membership for the 海角视频 auto industry boils down to two views. On the one hand is a view that Brexit is compatible with retaining a strong auto industry, as trade deals would anyway be cut with Europe and other countries.
In contrast is the view of the SMMT that “being part of a strong Europe is critical for future success” in particular by being able to shape regulations in Europe and ensuring mutual recognition of standards in wider trade deals.
While the Aston event focused on the 海角视频 car industry, the issues it raised - in terms of the single market, influencing regulation, trade, access to funding and networks for innovation, and the free movement of labour – will no doubt be relevant for other sectors in the 海角视频 economy as the in/out debate gathers pace.
* Professor David Bailey works at the Aston Business School in Birmingham.