Brexit uncertainty could hit investment in UK, warns German car chief

The head of the German car industry has added his voice to a growing chorus of demands from Europe for the UK government to urgently clarify its Brexit objectives.

Matthias Wissmann, the president of the German Automotive Industry Association, said prolonged uncertainty on the government’s position could damage investment in the UK, where German manufacturers have about 100 production sites.

Warning that the government was at a crossroads and had to decide soon which direction to take, Wissmann told the BBC: “We need, relatively soon, a clear answer … Will we have tariff and non-tariff barriers between Britain on the one hand and the European Union?”

Trade barriers would mean “a long period of uncertainties that will block future investments in Britain, and that makes me really concerned”, he said. “I hope that the British government … decides to go for the single market and not for any other regime which would need years to discuss and negotiate.”

Wissman’s remarks came amid continued confusion on the continent as to whether the UK would try to remain in the single market. The Brexit minister, David Davis, briefed MEPs on the subject on Tuesday and reportedly told them the government wanted to stay in.

“Today I have been told that the British government, as far as the economy is concerned, wants to stay in the single market,” Manfred Weber, the leader of the powerful centre-right EPP group in the parliament, said after meeting Davis.

But Downing Street later insisted the government had not shifted from its stated aim of wanting “a trading relationship that allows UK companies to trade both with and within the single market” and Weber also said he had “not received any new information. What we expect is clear proposals”.

Most British businesses want the UK to remain in the single market, an objective strongly opposed by pro-Brexit cabinet members and MPs because – as Brussels and the 27 member states of the EU have repeatedly made clear – it would mean accepting the principle of free movement.

Theresa May has insisted she does not want to reveal any detail of the government’s strategy for leaving the EU to avoid handing it an advantage once formal Brexit negotiations get under way, which the government has said will be before the end of March next year when it plans to trigger article 50.

Matthias Wissmann.

Matthias Wissmann. Photograph: Andreas Gebert/EPA

But the government’s refusal to say anything substantive about its strategy is leading to growing frustration and a hardening of attitudes in European capitals.

A French diplomatic source said on Wednesday the British government’s position on Brexit was “not easy to understand”. The government had failed to appreciate the negative economic affects of leaving Europe and the complexity of negotiating bilateral trade deals, the source added.

“They are having to start all over again, and it’s not easy,” he said, adding that the
biggest risk was that the Brexit process would drag on for too long and add “incertitude to incertitude”. “This would not be good for either Britain or for Europe,” he said.

“The longer it goes on the worse it will be because it creates economic uncertainty. If you are a Japanese investor and you want to invest in Europe, before you would have thought to invest in Britain, but what do you do now. Perhaps you say, we will go to France or Germany, and why not.

“Mrs May went to the G20 meeting and looked for agreements and found it wasn’t easy, and she went to India and that wasn’t great either.”

Charles Grant, of the Centre for European Reform thinktank, said in a report that the EU was showing “surprising” unity on its red lines for Britain’s departure and was preparing for a hard Brexit that would leave the UK outside the single market.

Grant said government pronouncements since October had contributed to “an erosion of the goodwill that EU leaders feel towards the UK. They reckon that UK politics is being driven by emotion rather than reason and that there is not much they can do to prevent a hard Brexit”.

Robert Fico, the Czech prime minister

Robert Fico, the Slovakian prime minister, said: ‘I’m not sure whether the UK knows what it wants.’ Photograph: Domenic Aquilina/EPA

Officials on the continent felt May’s meetings with other prime ministers showed she was “unwilling to engage much on substance … and seemingly concerned not to pursue courses that could upset Tory rightwingers”, Grant said.

Robert Fico, the Slovakian prime minister, told a conference in Bratislava on Tuesday that the divorce would undoubtedly be painful and Britain must not emerge a winner, but added: “I’m not sure whether the UK knows what it wants.”

Carlo Calenda, an Italian economics minister, was more outspoken, saying last week: “Somebody needs to tell us something and it needs to be something that makes sense … There’s lots of chaos and we don’t understand what the position is. The British government needs to sit down and put its cards on the table.”

Meanwhile, Norway’s trade and industry minister, Monica Maeland, said the UK was “perhaps Norway’s most important trading partner” and urged it to consider a soft Brexit, staying “as closely tied to the single market as possible”.

Norway is part of the European Free Trade Association (Efta), whose members – which include Switzerland, Iceland and Liechtenstein – are not members of the EU but have signed up to the free movement of goods, services, capital and people and so are part of the single market alongside the 28 EU countries in the European Economic Area (EEA).

The Swiss president, Johann Schneider-Ammann, said Switzerland was “open” to discussing Britain joining Efta after it leaves the EU. Maeland told Reuters the UK had not “given any signal that it wishes to become a member of Efta”, but that any eventual application would be discussed.