Brexit: EU car manufacturers already in talks about rejecting British-made parts, industry leader reveals

Growing fear that 'lots of jobs disappear' because of Theresa May’s vow to leave the customs union

Worried EU car manufacturers are already in talks about rejecting British-made parts because of Brexit, an industry leader has revealed.

The growing fear was that “lots of jobs disappear” because of Theresa May’s vow to leave the existing customs union, the head of a component supplying firm said.

The threat arises because EU “rules of origin” state that at least 55 per cent of a product's parts must come from within the EU if it is to benefit from free trade deals across the world.

As The Independent reported today, Brussels is advising EU businesses to think carefully before using components made in Britain – because they will no longer count as being from the EU customs area

Meanwhile, in the vital UK car industry, only around 25 per cent of parts are made up of domestic products – far short of the 55 per cent required in a typical free trade deal.

John Neill, chief executive officer of Unipart, which supplies car manufacturers with components and spare parts, warned it had long been telling ministers “clearly about these risks”.

“The reality is, if we can't count European parts as local content, then it is going to be very difficult for our car manufacturers to export to these markets where we already have free trade deals,” he told BBC Radio 4's The World at One programme.

And, asked if European car-makers were turning their backs on British firms, he replied: “Those discussions are being held continuously by the big global component manufacturers who are worried about investing in the UK because they feel there is so much uncertainty.”

Warning the British car industry was at risk, he said: “If we can't take advantage of the free trade deals we already have as part of a customs union and the EU, and we can't be competitive, the inevitable consequence is that less vehicles get sold and lots of jobs disappear.”

But Mel Stride, a Treasury minister, insisted the government was “confident” the issue would be resolved as part of the ongoing Brexit negotiations.

“It is an extremely high priority. It is one that I, the Chancellor, the Prime Minister and others are very much engaged with,” he told the same programme.

Mr Stride said that ministers had until the end of the post-Brexit transition period - which runs to the end of December 2020 - to settle the issue.

However, Barry Gardiner, Labour’s shadow international trade secretary, warned that would be too late for many UK firms.

“This is happening now. That is a problem for our country and a problem for our manufacturers. The government don't have a plan to deal with this,” he said.

Sky News also reported a separate note sent from the Dutch government to businesses echoing the European Commission’s advice.

A car industry executive told the broadcaster the change was a “catastrophe”, adding: “The hard Brexiteers have built a bomb under the UK automotive industry and the EU have lit it,” they said.