If Trump confirms 25 per cent tariffs
on US car imports on Wednesday, this will put extreme pressure on
the UK car manufacturing industry, threatening jobs and economic
growth, finds a new report from the Institute for Public Policy
Research (IPPR).
Over 25,000 direct jobs in the car
manufacturing industry could be at risk as exports to America are
predicted to fall, with UK employees at Jaguar Land Rover and the
Cowley Mini factory seen as some of the most
exposed.
However, as one door closes another
one opens, says the think tank, as the UK is well-placed to
capitalise on the transition to net zero and build on its niche
of manufacturing green planes, trains and automobiles. The
authors say there is only one way to secure transport
manufacturing jobs in the UK and that is to double down on making
sure Britain is competitive in zero- or low emission-transport
products.
As the global export value of internal
combustion engine cars fell by 24 per cent between 2018 and 2022,
the sale of electric cars soared by 740 per cent, and the UK has
pre-existing strengths to take full advantage of this
trend.
Over a third (35 per cent) of cars
manufactured in the UK in 2024 were electric or hybrid models,
many of which were exported.
The think tank says the UK currently
has 4,938 firms in the UK that manufacture transport products and
their components, with 263,000 employees and an annual turnover
of £102.1bn. Many of which already manufacture green transport
products, or have the capacity to.
In addition to making up for decreased
car exports to the US elsewhere by focusing on capturing the
growing international demand for green vehicles, there is also a
huge untapped internal market. Car manufacturing in the UK is now
2.5 times lower than car registration – meaning there is
currently a significant reliance on importing cars from
abroad.
The think tank argues that if the
government encourages consumers—both in the UK and
internationally—to "buy British and buy green," the UK could
boost economic growth, create jobs, and advance key climate
goals.
IPPR is advising the government to
include the following in its upcoming industrial
strategy:
-
Expand UK demand for green transport
products, by offering
incentives on domestic made electric cars to consumers, cutting
VAT on public charging points and providing grants to
lower-income buyers
-
Leverage the public sector's
purchasing power by
electrifying bus fleets and rail lines and ensuring procurement
contracts prioritize UK-based
producers
-
Attract investment into green
transport manufacturing projects by using the National Wealth Fund and British Business
Bank to enter joint ventures with private funders and provide
finance to promising businesses
-
Capitalise on trade opportunities
for green transport products,
by reducing customs and regulatory frictions with the EU and
introducing well-targeted tariff reductions for crucial inputs,
such as battery components, to keep manufacturers' costs as low
as possible
Pranesh Narayanan, research fellow at
IPPR, said:
“Trump's tariffs have huge potential
to completely destabilise the UK car manufacturing industry,
affecting tens of thousands of jobs and putting the government's
growth plans at jeopardy.
“However, as one door closes another
one opens. There is huge untapped potential in manufacturing
green planes, trains and automobiles and selling them at home and
abroad. If the government use the upcoming industrial strategy to
drive investment in these sectors, this could be the spark that
leads to thousands of new consumers to start buying British and
buying green.”
ENDS
Pranesh Narayanan, Simone Gasperin and
Dr George Dibb are available for
interview
CONTACT
Liam Evans, Senior Digital and Media
Officer: 07419 365334
l.evans@ippr.org
NOTES TO
EDITORS
-
Advance copies of the report are
available under embargo on request
-
Jobs at risk is an estimate of
direct manufacturing jobs that could be lost if UK-based
manufacturing at US-exposed companies is offshored to avoid
tariffs. This is calculated based on employees at UK-based
manufacturers that are particularly exposed to US exports,
including Jaguar Land Rover, BMW's Plant Oxford, where Minis
are produced, and the projected direct jobs for Agratas'
gigafactory in Somerset, for which Jaguar Land Rover will be a
major customer.
