Britain’s Auto Industry Will Survive, No, Thrive Outside E.U.

Britain’s Auto Industry Will Survive, No, Thrive Outside E.U.

Remember The Panic Over Euro Membership?
Industry Starts To Back Away From Insisting We Stay In.
But Ford, BMW Insist On Interfering In British Politics.

“For Americans, it would be like waking up one morning to find out that NAFTA’s Mexico and Canada now have a veto over the U.S. Congress”

BIRMINGHAM – The EU’s move to become a European state along U.S. lines is doomed to fail because of its lack of democratic institutions, and an early exit by Britain won’t harm its important auto manufacturing industry.

Those were propositions I put to Aston University’s “Staying in the Fast Lane?” conference last week. Not only would the U.K. industry survive outside of the E.U, it would positively thrive.

Aston University’s Centre for Europe arranged the conference to shed light on the issues as Britain moves towards an E.U. In/Out referendum by the end of 2017 at the latest.

I can’t say my thoughts were rapturously received because the audience was mainly industry insiders, many of whom seem to think that if Britain leaves it will be instantly consigned to outer darkness and shunned by E.U. members.

Indeed, the Society of Motor Manufacturers and Traders (SMMT), whose CEO Mike Hawes was the keynote speaker at the conference, gives that impression with its campaign to stay in.

A notorious survey it published last year showed 92 per cent of its members believed it would be more beneficial to stay in. The problem is that the tainted survey posed the question in a vacuum, with no sensible alternatives. Most fair minded economists and commentators, (if that’s not too much of a stretch), know that if Britain left the E.U. as Europe’s second biggest economy, it would quickly (within hours?) negotiate a free trade deal with little difference to the current arrangements. The survey implied that some kind of second rate arrangement would be likely if Britain left, but that wouldn’t be the case.

I pointed out that the leaders of Britain’s car industry have form when it comes to whipping up false fears about membership of European institutions. In 2002 the industry was united in saying loudly and over and over again if Britain failed to sign up for the single currency its economy would be doomed and the auto industry would wither and die. That clearly wasn’t the case.

Backing off
Until about a year ago, industry leaders were pretty much united in saying the same thing about Britain’s membership of the E.U., but since then they have begun to back off as opinion polls start to show that the “Out” supporters may well win. Even Nissan, probably the most strident follower of the notion that Britain was doomed outside of the E.U., has begun to back off. Nissan UK said it planned to spend another £120 million to produce the next generation Juke small SUV here, and now refuses to be drawn on whether Britain leaving the E.U. would make any difference. GM says if Britain left it wouldn’t abandon Vauxhall. Jaguar Land Rover, Aston Martin and VW’s Bentley say they could live with “LeaveEU”. VW has studiously avoided getting involved in the argument. Very sensible.

Ford remains adamant that Britain must stay in the E.U, even though it recently transferred production of Transit vans from Southampton to Turkey, outside the E.U. Clearly for Ford, membership of the E.U. is not crucial to selling to it. BMW has also sought to interfere in our politics to insist we stay in. Both these companies may rue the day when they took this view because LeaveEU threatens to spotlight their actions. I don’t think Detroit or Munich would be too pleased to see demonstrators parading outside of Ford and BMW showrooms with banners pointing this out to potential customers.

There is a simple reason why these multinational companies want Britain to stay in. It’s just convenience for them. In an ideal world for these companies there would be one government with only one currency to simplify their lives. This of course is never going to happen. Sensible well informed companies should simply say “the decision is up to the British people. Whatever they decide we will live with”.

I find it particularly aggravating that U.S. companies keep saying how Britain must stay in the E.U. Presidents Bush and Obama have weighed in too saying this. But Americans wouldn’t tolerate being governed from Brussels and Strasbourg by anonymous, unaccountable bureaucrats. For Americans, it would be like waking up one morning to find out that NAFTA’s Mexico and Canada now have a veto over the U.S. Congress.

Doomed to fail
E.U. members, excluding Britain, are set on an ever closer union, the logic of which is a single country, Europe. But this is doomed to fail, in my opinion, because the whole project is based on stealth. When Britain entered in 1973 it was assured that it was only about trade. There were no political ramifications at all. And therein lies the problem. The project was based on lies. There is no democratic framework for a single state. What was needed was a long-term project, similar to the federalists in the U.S. more than 200 years ago, to design a democratic framework. Because the E.U’s founders didn’t think Europeans would buy this, they carried on by stealth, trying to suck the countries so far in they wouldn’t be able to disentangle themselves. Again in my opinion, the whole project will have to be junked, and will only remerge again as a long term plan with proper institutions guaranteeing openness and accountability. That will take a very long time to bring about, but then it might have a chance of popular approval.

Michael Burrage, analyst with Cimigo, an Asian-based marketing and corporate strategy, in a report a couple of years ago, pointed out that since joining the Common Market in 1973, Britain’s share of trade with core E.U members had remained virtually unchanged. The conventional wisdom assumes there would have been a huge increase.

Burrage also agrees if Britain left the E.U., a free trade agreement would be likely.

“In the event of leaving, the U.K. government will negotiate free trade with everyone, and the interests of the motor industry, and the finance sector will be priorities one and two,” Burrage said.

“As a matter of fact, the motor industry will also be number one priority for the Germans. It is inconceivable that they would allow the other E.U. members to impose a tariff on U.K. based manufacturers, knowing that the U.K., a very important market for all of them, could reply with an equivalent,” he said.

Defeatists
And those naysayers who reckon the auto industry needs to be a member of the E.U. so that it can influence regulation should look at the likes of BMW and Mercedes. They are hugely successful in the U.S. and China, with no say in the politics at all. Those who predict disaster for Britain outside the E.U. are really defeatists who lack confidence in our own ability.

But all these economic arguments probably will make little difference when the referendum comes around. That is likely to be dominated by the fear of unlimited Muslim immigration, and there can only be one result if that is the case. Thank you and goodbye.