SMMT warns 'Made in Europe' rules risk €24bn UK auto contribution
UK automotive production supports €24bn in EU economic activity and 250,000 jobs, but SMMT says new 'Made in Europe' proposals could put this at risk.
The UK automotive industry plays a significant role in the European Union’s economy, supporting €24 billion of economic activity across the bloc. This figure comes from new analysis released by the Society of Motor Manufacturers and Traders (SMMT), based on research conducted by Oxford Economics. According to the report, UK automotive production underpins 250,000 jobs throughout the EU, demonstrating the depth of integration and interdependence between the UK and EU automotive sectors.
UK Automotive Sector's Economic Impact on the EU
The SMMT emphasises that the UK’s automotive exports to the EU are crucial for both economies. These exports drive €5.6 billion of spending on EU goods and services, supporting 58,000 jobs and generating €1.6 billion in tax revenues within the EU. The overall trading relationship between the UK and EU automotive sectors is valued at €80 billion annually, reflecting a long-standing partnership that extends beyond just finished vehicles to include parts, components, and services.
'Made in Europe' Proposals and Their Implications
The SMMT has raised concerns over new 'Made in Europe' proposals currently under consideration by EU policymakers. These proposals could see UK-built vehicles excluded from incentives that are available to products manufactured within the EU. The SMMT warns that such a move would threaten UK automotive exports to the bloc, with direct consequences for jobs, supply chains, and tax revenues on both sides of the Channel.
The exclusion of UK vehicles from EU incentives would not only reduce the competitiveness of UK manufacturers but also risk disrupting established supply chains that have developed over decades. The SMMT argues that this could lead to reduced scale, higher costs, and limited consumer choice within the EU market. The organisation also points out that the automotive industries in the UK and EU are deeply intertwined, with cross-border cooperation benefitting both economies.
Industry Reactions and Policy Considerations
Industry leaders, including the SMMT, have called on EU policymakers to recognise the value of continued UK-EU collaboration in the automotive sector. They argue that policies which restrict UK participation in EU incentive schemes could undermine the benefits of cross-border cooperation and threaten the economic contributions made by the UK automotive sector to the EU.
The SMMT’s analysis highlights the potential risks of introducing policies that limit access to incentives for vehicles produced outside the EU. Any such restrictions could have a knock-on effect on the supply of automotive parts and components, many of which move freely between the UK and EU as part of complex supply chains. This could, in turn, impact the competitiveness of the EU’s own automotive sector, which relies on timely and cost-effective access to UK-made products.
The Importance of Integrated Supply Chains
The automotive industry in Europe is characterised by highly integrated supply chains that span multiple countries. Vehicle assembly plants in the EU often rely on components and systems produced in the UK, and vice versa. The SMMT and Oxford Economics report underlines that any disruption to this relationship could result in delays, increased costs, and reduced competitiveness for manufacturers on both sides.
Maintaining open and collaborative trading arrangements is seen as essential for the future success of the sector. The SMMT continues to urge policymakers to consider the broader economic implications of any changes to incentive schemes, warning that the costs of reduced cooperation could outweigh any perceived benefits of localisation policies.
Outlook for UK-EU Automotive Relations
As the EU considers new policies around the definition of 'Made in Europe' and the eligibility of vehicles for incentives, the future of UK automotive exports to the EU remains uncertain. The SMMT’s report serves as a reminder of the economic value generated by cross-border trade and cooperation. With €24 billion of EU economic activity and 250,000 jobs at stake, the outcome of these policy discussions will be closely watched by industry stakeholders on both sides of the Channel.
The SMMT and other industry groups are expected to continue lobbying for solutions that safeguard the interests of both UK and EU automotive sectors. Their aim is to preserve the benefits of integration and ensure that the industry remains competitive, innovative, and capable of supporting jobs and economic growth throughout Europe.
