International credit rating agency Moody’s has stated that the global auto industry would be affected by a no-deal Brexit, with UK, German and Japanese carmakers having significant production capacity in the UK.
“The UK production of these automakers is highly interconnected to the EU, and so a no-deal Brexit will create a significant negative impact through various channels, most notably, the cessation of tariff-free automobile trade with EU countries. In such a scenario, UK-made cars imported into the EU would face a 10 percent auto tariff, in line with the taxes currently paid by non-EU countries.” said Motoki Yanase, Moody’s vice president and senior credit officer.
According to Moody’s, furthermore, additional time and documentation to clear customs could require automakers to increase inventory levels, while higher unemployment in the UK, reflecting economic damage from a 'no-deal' Brexit, would contain wage pressures arising from weaker EU migration.