Carmakers call for transitional EU deal

The government must secure a transitional Brexit deal to protect the future of the UK car industry, a trade group has said.

The Society of Motor Manufacturers and Traders (SMMT) said Britain was highly unlikely to reach a final agreement with the EU by the March 2019 deadline.

That meant carmakers could face a "cliff edge", whereby tariff-free trade was sharply pulled away.

It warned the industry would suffer without a back-up plan in place.

The EU is by far the UK's biggest automotive export market, buying more than half of its finished vehicles - four times as many as the next biggest market.

UK car plants also depend heavily on the free movement of components to and from the continent.

The SMMT said any new relationship with the EU would need to address tariff and non-tariff barriers, regulatory and labour issues, "all of which will take time to negotiate".

"We accept that we are leaving the European Union," said chief executive Mike Hawes.

"But our biggest fear is that, in two years' time, we fall off a cliff edge - no deal, outside the single market and customs union and trading on inferior World Trade Organization terms.

"This would undermine our competitiveness and our ability to attract the investment that is critical to future growth."

He called on the government to seek an interim arrangement, whereby the UK stayed in the single market and customs union until a new relationship was brokered.

UK car manufacturing generated £77.5bn of turnover last year and accounted for 12% of all goods exports, according to the trade group.

It added that almost a million people were employed across the wider automotive industry.