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Remain or Leave? The car industry

Britain's car industry is an economic success story.

Since 2009 production has risen, jobs have been created and we're now exporting cars at a record rate.

Four out of every five cars that are made in Britain end up abroad, making our huge trade deficit with the rest of the world look significantly less embarrassing.

An industry that once looked dead is now the poster child for British manufacturing.

And the remarkable thing about it is that the big companies making cars in Britain are entirely foreign owned.

Ford and General Motors (both American); Jaguar Land Rover (Indian); Nissan, Honda and Toyota (Japanese); BMW, Mini, Rolls Royce and Bentley (all German).

Britain's car manufacturing is an economic success story Credit: PA

These companies have collectively invested around £10 billion in their British operations since the financial crisis.

So what would a vote to leave the European Union mean for industry in Britain and the 799,000 jobs it supports?

Well, this morning, 77 per cent of car-makers have agreed that remaining in the EU is "best for our business", and 59 per cent said that Brexit would have a "negative impact".

That's pretty emphatic - but how sceptical should we be?

The Nissan plant in Sunderland. Credit: PA

The Leave campaign points out that 15 years ago the car industry threw its weight behind the unsuccessful campaign for Britain to join the Euro.

At the time, the likes of Toyota and Vauxhall hinted that British factories might close unless we scrapped the pound.

Britain kept the pound, Toyota and Vauxhall still make cars here.

There are some certainties.

In or out of the EU, car-makers will still want to sell us as many cars as they can.

Less clear is whether Britain will still be such an attractive place for them to build cars.

The future of Ellesmere Port was secured after a £125m deal to build the new Astra there Credit: PA

Vauxhall-badged cars have been produced at Ellesmere Port on the Wirral since 1964.

In 2012, the plant almost closed, but General Motors decided to build the new Astra there - and so car production rolls on.

The new Astra, which has just been voted car of the year, is made in Britain.

But it could have been made at any of General Motors's other factories in Germany, Belgium, Spain or Poland.

The west coast, one of the most western economies in the European Union, isn't an obvious place to locate a car factory, but the company argues Britain's membership of the single market makes the geographical disadvantage less significant.

Britain could soon become a less attractive place to build cars if we leave the EU. Credit: ITV News

As it stands, General Motors can move a car built at Ellesmere Port to any of the 27 other countries in the EU without paying any import or export taxes.

The company's staff can move freely between its European factories.

If Britain left the EU, the industry fears these freedoms may change.

I say "may" because it's all very murky. We know that in the event of Brexit existing trade arrangements would continue for a period of two years.

Thereafter, if we are to avoid the EU imposing tariffs and duties on British made cars and components, we would need to negotiate a new set of trade deals.

Now of course, trade deals come in all sorts of shapes and sizes and in theory anything is possible.

But in practice, according to research by KPMG, anything other than continued access to the single market is likely to increase the cost of making cars in Britain (damaging the industry) and the prices that British consumers pay.

Part of the problem is that those who want Britain to leave the EU haven't yet spelt out what terms they believe they can secure for ongoing access to the single market.

They talk with passion about Britain going it alone but faced with such uncertainty, it's perhaps unsurprising that car-makers are so keen to stick with what they know.

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