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Gearing up for Brexit: the common rulebook and its implications for the UK automotive sector

Gearing up for Brexit: the common rulebook and its implications for the UK automotive sector

  • United Kingdom
  • Brexit
  • Diversified industrials - Automotive

27-07-2018

The UK government has set out its proposal for the future of the post-Brexit UK-EU relationship in a new white paper published on July 12, 2018. Here, partner and Head of Automotive, Adam Fisher, and Senior Associate Helen Amison, reflect on what this proposal could mean for the UK automotive sector.

By proposing the UK maintain a common handbook for goods, with the UK agreeing to the EU’s existing standards and regulations applicable to the automotive sector, the government has recognised the importance of maintaining “‘just-in-time’ supply chains and avoiding the need for buffer stocks and additional on cost of tariffs.  The government’s proposal also allows for the mutual recognition of vehicle type approvals proposed by the rulebook allowing both the UK and EU to permit vehicles to enter into service on the basis of a valid certificate of conformity from the UK or EU member state.

In seeking to maintain the status quo the proposal has sought to address some of the concerns voiced recently by JLR and BMW, including the huge financial implications to the industry of halting production lines which is extremely likely if there is a hard Brexit or a no deal Brexit due to border restrictions amongst other matters.  However, fundamental issues such as how any future changes made by the EU to the common rulebook would be dealt with remain uncertain.  It is this uncertainty and the risk that the UK could at any time reject a change to a regulation and in turn the common handbook and the consequence of this which will be of considerable concern to manufacturers even if the government’s white paper is agreed.

The government’s recent announcement, that it will imminently release information for businesses and individuals on how to prepare for a no Brexit deal, highlights the realistic prospect that no deal will be reached come 29 March 2019.  Whilst businesses are already preparing for this, it seems extremely unlikely that automotive manufacturers will be able to take the necessary steps to mitigate against the potential pitfalls by building key component stock levels given the volumes concerned."

 

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