Brexit trade talks: EU dreading no deal as businesses warn of ‘huge job losses’

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Prime Minister Boris Johnson reached an agreement with President of the European Commission Ursula von der Leyen last week to extend Brexit trade talks for another month. EU sources said the conversation was “not a game-changer” but not “unhelpful”, with both sides showing resolve to find “landing zones” on the most difficult areas. It comes after the EU and UK negotiators have clashed over their respective red lines, leading to stalled negotiations. Brussels negotiator Michel Barnier has demanded the EU keep access to UK waters, or Britain will be excluded from European markets. Meanwhile, the UK’s internal market bill has infuriated the bloc as it seeks to override the withdrawal agreement.

As a no deal scenario has looked increasingly likely, businesses in Europe have expressed concern.

One industry especially worried is the automotive industry, warning it needs a deal in order to remain competitive.

CLEPA, the body representing European suppliers and one of the 23 signatories, warned that a “disorderly exit of the UK will exacerbate the stress” amid the economic crisis and the transition to a greener, more automated industry.

Its statement earlier this month read: “The sector needs negotiators to strike a deal. And equally important, the sector needs a deal that maintains the industry’s global competitiveness.”

Figures from the automotive industry also warned that negotiators on both sides must now pull out all the stops to avoid no deal at the end of the transition, which according to new calculations would cost the pan-European automotive sector some £100billion (€109bn) in lost trade over the next five years.

They said this would put jobs at risk in a sector that supports 14.6 million livelihoods, representing one in 15 of EU and UK jobs.

New calculations suggest that, for cars and vans alone, a reduction in demand resulting from a 10 percent World Trade Organisation (WTO) tariff could wipe some three million units from EU and UK factory output over the next five years.

This could lead to losses worth £47billion (€51bn) to UK plants and £52billion (€57bn) to those based across the EU. Suppliers would also suffer from these changes.

Eric-Mark Huitema, ACEA Director General spoke of his concerns for the European car industry.

He said: “The stakes are high for the EU auto industry – we absolutely must have an ambitious EU-UK trade agreement in place by January. Otherwise our sector – already reeling from the Covid crisis – will be hit hard by a double whammy.”

There are also fears in the agricultural industry.

EU figures show that the UK was the top destination for the bloc’s agri-food exports, worth over £36billion in the year to January 2020.

In recent years nearly half of UK imports from the EU have come from the Netherlands, Germany, France and Ireland.

In June three major European industry bodies came together to warn of the “significant negative consequences” from a no deal scenario that would bring tariffs and disrupted supply chains.

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The statement from Copa-Cogeca, Celcaa and FoodDrinkEurope said: “These can be expected to include a major decrease in export volumes from the EU to the UK, a significant fall in revenue, and consequential job losses.

“The impact on SMEs, farmers and agri cooperatives would be particularly detrimental.”

They added that it was of “utmost importance” to keep close ties between EU and UK food standards agencies, calling for temporary arrangements in 2021 if no agreement is reached.

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