UK car industry needs 'swift EU deal to curb high tariffs'

Boris Johnson visits Ford's engine plant in Dagenham Image copyright Dan Kitwood/Getty Images

Britain must strike a trade deal with Europe as soon as possible to protect the country's multi-billion pound car industry and avoid high tariffs.

David Bailey, professor of industry at Aston University, warned of a "big uncertainty" for the sector following the UK's vote to leave the EU.

Without a deal, he fears a return to the days when the industry faced a 10% tariff on exports.

The UK exports 77.3% of its car output, 57.5% of which goes to Europe.

"What we don't want in two years' time is to go back to [World Trade Organisation] rules which involve 10% tariffs on car exports," he said.

Prof Bailey added: "Remember, the car industry has had about £8bn investment in the last four years - companies coming here to produce cars largely for the European market. We do not want to deter that.

"So, we need to make it clear to those companies as quickly as possible that free access to the European market is still in place and we will have a good trading relationship with Europe."

Almost 1.6 million cars were built in the UK last year, up 3.9% on 2014. Industry analysts predict car output to reach record levels of around two million units by 2017, overtaking the 1972 record of 1.92 million.

Ford, which employs about 14,000 staff in the UK, warned on Friday that it would "take whatever action is needed to ensure that our European business remains competitive and keeps to the path toward sustainable profitability".

The boss of Nissan, which produces cars at Sunderland plant, has previously hinted that a vote to leave the EU could impact investment.

"There are going to be a lot of questions about (whether) you want to continue to invest in the UK for Europe if the UK is outside Europe," Mr Ghosn told CNBC before Thursday's referendum.

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