The Brexit Effect
Thursday, 8. August 2019
Up until Boris took possession of the keys to number 10, I like many believed that it would be impossible for us to leave the EU without a deal.
However, I’m now starting to believe that this is a serious option and might be out of our hands anyway because if we don’t negotiate a deal we leave without a deal whether we like it or not. It’s the law.
Even with a deal we will still be outside the EU so can’t take advantage of the free trade deals already in place between the EU and various countries around the world.
Let’s take South Korea where Kias and Hyundais are built. As part of the EU we are able to import their cars duty free but the minute we come out of the EU (unless we have a deal with a transition deal that includes current free trade agreements) we will have to pay 10% duty on top of the cost of the cars.
Whilst Kia and Hyundai are a South Korean group what about other manufacturers who build their cars in non-European countries? For example Mercedes build cars in Mexico with whom the EU has an agreement.
As import duty is applicable from the last country that touched the goods, even with a deal that includes Germany, as the cars may come from Mexico their cars will be 10% more expensive. In fact, Ford, GM, Toyota, Nissan, Mazda, Honda and VW all have manufacturing plants in Mexico.
Of course, we may be able to negotiate quick deals with all the countries with which we have free trade deals as part of the EU but the consensus is that this won’t happen. So at this point in time with so many unknowns my advice is don’t wait till after the end of October if you are toying with the idea of taking out a new lease.
As always – if you see a deal that you like don’t wait for a better deal as they may be gone forever after the end of October. By Graham Hill
