The UK economy takes a hit as car manufacturing companies close due to Brexit

Britain’s manufacturing output deteriorates as car production declines by 24%, according to the Office of National Statistics

The UK economy takes a hit as car manufacturing companies close due to Brexit

The Brexit uncertainty continues to affect businesses. Despite the UK’s leaving date being postponed to Thursday October 31, the European Commission has raised warnings about the EU’s economy in relation to international trade tensions and clearly the UK is facing consequences too. Now, car manufacturing production is seeing a steep decline, according to data released by the Office of National Statistics.

The report said that the UK’s GDP shrunk by 0.4% in April 2019 following the closure of car factories across the country. Britain’s growth in manufacturing in February was 1% and 0.9% in March but was followed a sharp decline of 3.9% in April as car production dropped by 24%. 

It’s no surprise car production plummeted. The decreased demand from China, along with stricter issues surrounding diesel engines, caused the temporary pause in activity for car manufacturers. While many halted manufacturing due to Brexit, some have reduced production due to a slower economy overseas. In fact, the Society of Motor Manufacturers and Traders said car production fell by 44.5% with only 70,971 cars produced in April 2019 compared to 127,970 in 2018.

Indeed, car company closures are becoming more prominent with Ford named the most recent car manufacture to close its plants which will put 1,700 jobs at risk. 

Ford is hardly alone. In February 2019 Honda disclosed it was going to close its Swindon car plant in 2021 threatening 3,500 jobs. Elsewhere, Japanese car maker Nissan made a U-turn in the decision to build the new X-Trail SUV due to Brexit. Additionally, in April 2019  Jaguar Land Rover shut down its plant for a week. 

Commenting on the these figures, head of GDP Rob Kent-Smith, said: “GDP growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns. There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.” 

The no-deal Brexit has caused an epidemic among car manufacturing companies. Only time will tell what lies in the future for other businesses, especially SMEs, which don’t have finances anywhere near as robust as the big firms. 

Fahima Begum
Fahima Begum

Share via
Copy link