Daily Management Review

Investments in the UK car sector fall by more than 70% due to Brexit risk


Investments in the UK car sector fell by more than 70% in the first half of the year due to fears about Brexit, the British Society of Motor Manufacturers and Traders (SMMT) reported.

The volume of investments in the first half of 2019 decreased to ‎£ 90 million ($ 109.5 billion) as compared with ‎£ 347.3 million for the same period in 2018 and ‎£ 647.4 million in the first half of 2017.

“Fear of missing a deal [on Brexit] makes investors sit back,” said SMMT executive director Mike Hawes. “The worst outcome is the lack of a deal. That's what they fear, that's why they don’t invest.”

Companies spent at least £ 330 million preparing for contingencies in connection with Brexit, in particular, providing storage space and storing parts to mitigate the effects of potential delays in the delivery of models and components.

Prime Minister Boris Johnson in recent days has repeatedly stated that he would seek to conclude a new agreement on Brexit with Brussels.

Johnson, an active supporter of Brexit, promised to bring the UK out of the block with or without an agreement by October 31.

According to many investors and economists, the no-deal Brexit will create a shock for global markets and lead the world's fifth largest economy to recession.

Prime Minister has less than 100 days to negotiate a new Brexit deal with the European Union before the UK leaves the bloc in late October. Meanwhile, the EU said it would not review the Brexit deal concluded in November.

The production of cars in the UK fell by 20% in the first half of the year, as the industry faced a weakening of demand in key markets, tensions in trade and a decline in sales of diesel cars in European countries.

“We need an internationally competitive business environment to stimulate more investment, more innovation and more growth,” said Hawes. “This starts with an ambitious Brexit deal... and we hope the new administration will quickly make a deal.”

source: bbc.com