The German car industry and Brexit

The German car industry occupies a particular and peculiar place within the Brexiter imagination. Particular, because it is invariably cited to ‘prove’ that an excellent UK-EU trade deal is inevitable. French cheese and Italian Prosecco occasionally feature in pursuit of the same argument but less often, perhaps because Brexiters hope that referencing German cars will make some “Vorsprung Durch Technik” rub off on their threadbare case.

At all events, the centrality of German car makers to the case for Brexit was expressed repeatedly during the Referendum campaign by, for example, Peter Hargreaves, the biggest individual donor (£3.2M) to the Leave campaign:

"Can you imagine if they put up a trade barrier - and we would reciprocate immediately - just imagine the three phone calls [German Chancellor] Angela Merkel would get the following day, the chief executive of [Volkswagen], the chief executive of Mercedes and the chief executive of BMW."

The campaigning group Get Britain Out agreed, almost word for word:

“Can you imagine … Germany damaging sales of BMW and Mercedes cars to Britain? No! Trade will carry on as normal.”

And the sentiment was echoed by David Davis, now the Brexit Secretary, quoting from what seems to be the Brexiters’ scripture book:

“Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.”

There are several things that can be said about this. Firstly, it shows an extraordinary ignorance (if not downright dishonesty) about how government trade policies are made. Neither in Germany, nor anywhere else, is it just a matter of phone calls from leading manufacturers to the country’s leaders. The acid test of this is actually Brexit itself: if trade policy were made by businesses then there is no way that Britain would be leaving the EU anyway. Second, it shows a complete ignorance of how the EU does trade deals, including any post-Brexit deal with the UK, which will not be done by Germany but by the whole EU. Third, it contains a huge contradiction: Brexiters usually complain that the EU is slow and lumbering, with trade deals taking far longer than necessary. Yet they pretend that a post-Brexit trade deal would be done within a few minutes or at least that it will be the easiest trade deal in history, as Liam Fox put it last week.

But as well as occupying a particular place in Brexiter mythology, it is also peculiar because normally Brexiters insist that the key issue is regaining what they simplistically call ‘sovereignty’. Yet whereas the multiple systems of accountability within the EU are deemed to negate sovereignty, the idea that the fate of Britain should be determined in a few company boardrooms in Germany elicits no such qualms. In the strange lexicon of ‘taking back control’ it seems that ceding that control to BMW etc. is of no matter.

As the realities of Brexit begin to bite much less is now heard of the magical powers of the German car industry, but it lingers on in the minds of Brexit’s more gullible and disingenuous advocates. Last Sunday on BBC Radio 4’s The World this Weekend (time limited podcast) a long report on German industry’s views of Brexit demonstrated what had been said for months: that the integrity of the single market mattered far more than accommodating Brexit. But, undeterred and apparently unaware, up popped leading Brexiter Owen Paterson to repeat the scripture that German industry would ensure a good deal (along with the other, associated, Brexiter fantasy that the UK trade deficit in goods with the EU makes a good deal inevitable). It was truly extraordinary to hear one after another German industrialist explain that the Brexiter view was nonsense and then hear Paterson repeat that view as fact, and spoke volumes for the complete lack of realism of Brexiters. Paterson’s position is especially absurd as he is one of those Brexiters who before the referendum argued for the centrality of single market membership post-Brexit and now pretends that the benefits of the single market can be magically maintained despite leaving it.

Whilst the main Brexiter fantasy about the German car industry is that it will enforce a good trade deal, it also figures along with the car industries of other countries in the fantasy that Brexit will not impede inward investment. So, unsurprisingly, they greeted the news that BMW are going to build the electric Mini in the UK with great glee. But that glee was misplaced for several reasons. First, the investment is relatively small in car industry terms, involves no new production line and the main components will be built in Germany. The key issue is where car companies decide to build all-new models. Second, it does not negate the fact that car industry investment has collapsed catastrophically as a result of Brexit, from £1.66billion in 2016 to just £332M in the first half of 2017.

The real point, however, is this. No one ever claimed that Brexit would put an end to investment in the UK, just that it would reduce it. But Brexiters disparaged these and other warnings by a kind of reductio ad absurdum. So, for example, when warned that trade with the EU would be damaged they pretended it was a warning it would cease; that inward investment would be damaged, it would end entirely; that the EU promoted peace, it meant WW3 would break out. Reduced to absurdities, the warnings could be dismissed as Project Fear.

So the BMW investment in the Mini does not in any way make the case for Brexit. It shows that some investments that would have been made were Brexit not happening will still be made even though Brexit is happening. We know that many other investments that would have been made are not happening because of Brexit. But there is not a single case – this really needs to be emphasised: not one single case – of a company that would not otherwise have done so making an investment because of Brexit.

This matters because Brexiters have now switched to arguing that Brexit will not be a disaster, or that the bad effects are in some way worth it. But that isn’t how Brexit was sold to the British people. Voters were told that there would be no bad effects and, even, that Brexit would usher in a new age of prosperity. It’s not ‘remoaners’ who have cause to moan about this, it is the millions of leave voters who were so comprehensively misled. And nowhere were they more misled than in the Brexiter lie about what the German car industry would do for them. We now know that:

“German industry has warned Britain not to rely on its help in securing a good Brexit deal, in a stark intervention that strikes a blow at the government’s EU departure plans”.

In this, as in so much else, it’s time for Brexiters to get real. No one is going to rescue them from the consequences of their lies, they alone are responsible for their lies, and they will be held to account for their lies.