Following the uncertainty over Brexit, the assessment of the Society of Motor Manufactures and Traders has found that investment in the industry fell by 34 per cent in 2017.
The group said that publicly announced investments in vehicle and supply chain manufacturing had slumped to $1.6 billion.
The Chief Executive Officer, SMMT, Mr. Mike Hawes, said, “We urgently need clarity on the transitional arrangements for Brexit.”
Automakers are worried that a messy divorce from the European Union would make it more expensive for them to import components into Britain, and push up the price of cars exported to Europe.
Global automakers support hundreds of thousands of jobs in Britain. Their workers are well paid, and many of their factories are located in communities where jobs are needed.
Hawes explained that automakers need to know the terms of trade during Britain’s transition out of the EU, which is expected to last for roughly two years.
He said, “We compete in a global race to produce the best cars and must continue to attract investment to remain competitive. The evidence is that investment is now stalling so we need rapid progress on trade discussions.”
Domestic demand for British cars dropped by 9.8 per cent in 2017, but the industry was supported by record foreign exports.
The EU accounts for over half of Britain’s automotive exports. Last year, a weaker pound helped spur demand in Japan (+25.4 per cent), China (+19.7 per cent) and Canada (+19.5 per cent).
Shares in Capita plummeted more than 40 per cent after the major British outsourcing company issued a profit warning and announced a drastic turnaround plan.
The company, which employs 70,000 people worldwide, is the latest government contractor to run into trouble in Britain. Another major outsourcing firm, Carillion, putting 43,000 jobs at risk.
The two firms are key players in an industry in which private sector companies bid on government contracts to provide services such as school meals, prison security and health care administration.
Critics argue that the companies, in order to win business, sometimes undertake projects with very thin margins, which can lead to increased debt and risk.
