Land Rover in river

Jaguar Land Rover warns of threat to its UK activities in the event of a hard Brexit

Image credit: Dreamstime

Jaguar Land Rover (JLR) has warned that a hard Brexit could force the company to reconsider its continued investment in the UK and even close its UK factories.

Although the company had invested consistently in its UK operations in the years leading up to the EU referendum, it has since expressed concerns about its future in the country.

At the beginning of 2018, it scaled back production at its Halewood plant, where three Range Rover models are built. In April, it announced that, due to slumps in sales associated with Brexit and taxes on diesel cars, it would be cutting 1,000 temporary contract jobs in Solihull. In June, it announced that it would be moving production of the Land Rover Discovery SUV to central Europe.

Now, JLR has warned that a Brexit deal which sees the UK leaving the customs union - which currently prevents customs duties being levied on goods within the union - could force the company to close factories in the UK and may threaten £80bn worth of investments.

Speaking to the Financial Times, Ralf Speth, CEO of JLR, commented that: “A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year. As a result we would have to drastically adjust our spending profile. We have spent around £50bn in the UK in the past five years, with plans for a further £80bn in the next five.”

“This would be in jeopardy should we be faced with the wrong outcome.”

He added that since the age of Adam Smith [the 18th-century political economist], the UK has made the case for free trade and that it “must retain tariff and customs-free access to trade and talent with no change to current EU regulations” if the national automotive industry wishes to remain globally competitive and a major employer.

Speth called for “greater certainty” on the type of Brexit deal we may expect, if it were to continue investing heavily in the UK.

“If I’m forced to go out because we don’t have the right deal, then we have to close plants here in the UK and it will be very, very sad. This is hypothetical and I hope it’s an option we never have to go for.”

Pro-Brexit Conservative MP Owen Paterson responded to Speth on Radio 4’s Today programme by commenting that JLR would be in a “wonderful position” following the UK’s withdrawal from the single market, a comment which drew ridicule from other MPs.

JLR has been joined by fellow automaker BMW – as well as engineering companies Siemens, Airbus and others – in delivering public warnings of the dangers of a hard Brexit and the lack of clarity over the sort of deal that may be expected.

In June, the Society of Motor Manufacturers and Traders issued a sharp warning to the government, saying that the automotive industry was already severely suffering from Brexit uncertainty and that there would be “no Brexit dividend” for the industry. Health Secretary Jeremy Hunt criticised these groups’ public warnings as “completely inappropriate”.

Theresa May and the Cabinet are due to meet at the Prime Minister’s official country residence, Chequers, at the end of this week, following public disagreements within the party over what form a Brexit deal should take. The government is hoping to settle on the details of a preferred customs arrangement following the UK’s exit from the bloc in March 2019.

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