Europe - should we stay or should we go?

3 minute read
30 June 2014

Wragge Lawrence Graham & Co is pleased to announce the appointment of influential business and automotive expert David Bailey as a consultant to the firm's Automotive Sector Group - one of the firm's priority sectors.

Together we will bring you regular legal and commercial updates in which we comment on topics that are relevant to the sector, and include David's unique perspective as one of the country's foremost academics and commentators on the industry.

This month, David discusses the important topic of EU membership - a subject which will become even more important as US/EU free trade talks progress.

"The impact of membership on the UK's auto industry was explored recently in a report by the Society of Motor Manufacturers and Traders (SMMT) and KPMG. It found some big benefits for the UK's auto industry from staying in the EU, particularly in relation to investment, growth and job creation.

"The report stresses that EU membership boosts both the attractiveness of the UK 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 UK auto manufacturing, thereby supporting sales and facilitating supply chain growth. It also adds that EU bargaining power in trade negotiations is critical to improving access to international growth markets, thus helping major exporters such as Jaguar Land Rover.

"A second argument centres on regulations and standards. The report highlights that the UK needs a powerful voice at EU level to make sure the specific needs of the UK's auto industry are considered.

"Some 45% of UK auto exports go to the EU, so even if the UK were to leave and have some sort of access to the Single Market, producers in the UK would still have to meet European regulations to sell into Europe. That would mean having to follow European regulations rather than helping to shape them, which might mean German or French firms shaping them for their own benefit.

"Other arguments for remaining in the EU include ensuring access to EU funding that has boosted R&D and innovation at businesses and universities in the UK, and the free movement of labour which enables UK-based firms to combine domestic and international talent (which is especially important given the skills shortages in UK 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. But it does suggest - as Mike Hawes at the SMMT has noted - that when it comes to auto then being part of a strong Europe is critical for future success.

"In the wake of the recent elections to the European Parliament, the future of the UK in the European Union remains something of a political hot potato. But when it comes to the auto industry at least, it seems that there are some strong arguments for the UK staying in and helping to shape the future of the industry."

Look out for next month's alert on the issue of product recalls and the dreaded class action.

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