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Britain's Withdrawal From EU Would Help Car Industry

In the wake of the UK's superb car export success during 2012 and in the first month of 2013, Westminster think tank, Civitas, the Institute for the Study of Civil Society, has said that a British withdrawal from the EU would help Britain's car industry. The research comes after David Cameron announced last month that there would be a referendum on Britain's EU membership should the Conservatives win the next election.

In the wake of the UK's superb car export success during 2012 and in the first month of 2013, Westminster think tank, Civitas, the Institute for the Study of Civil Society, has said that a British withdrawal from the EU would help Britain's car industry. The research comes after David Cameron announced last month that there would be a referendum on Britain's EU membership should the Conservatives win the next election. Research by the think tank suggests that the car industry in Britain would be able to attract more, rather than less, investment from global car companies if Britain was outside the EU. The think tank also suggests that there are strong financial reasons why there would be no backlash from the EU in the form of trade barriers.

 
Research shows that in 2010 the UK exported £9.5 billion outside of the EU in comparison to exports to EU countries of £7.8 billion. With the UK's outstanding success in recent years in the key expanding markets of India and China, this gap is set to widen. Depressed car sales across the EU meanwhile will also contribute to fewer British exports into the EU market. The think tank points out that the EU produces 84% of cars sold in Britain but imports less than 60% of the cars made here. This trade imbalance in the EU's favour would provide a strong incentive for the EU to maintain free trade with the UK car industry. The likelihood of a free trade agreement would also be boosted by the fact that the EU's largest economy, Germany, has enjoyed a trade surplus with the UK of some €108 billion in the years from 2007 to 2011.
 
The trade imbalance specifically within the car industry is also significant. In 2011 for example, Germany exported 474,000 more cars to Britain than it imported from us. This makes it very likely that the powerful German automotive industry would lobby its government hard to maintain free trade links with the UK. Any trade barriers would impose duties of 10% on German car exports to Britain. This duty would also be imposed on exports of BMW's British made MINI, making it harder for the successful model to compete in EU markets. With EU car sales declining steadily last year while the UK experienced an 8.2% increase, it is clear that the EU is not a driving force in the British car industry. Instead, the report suggests, Britain should focus on expanding its successful export drive into emerging markets such as China, India and south east Asia while maintaining the position of its luxury brands in the key US market.

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