How Could 'Brexit' Affect Motorists?
Here's how we could be affected if we were to leave the EU...
You’ve all probably read about how ‘Brexit’ will affect the automotive industry and how the majority of manufacturers seemingly supporting the ‘in’ vote, but how will it effect you (the motorist)?
The country seems to have gone into a bit of a panic since David Cameron announced that the EU referendum he promised last year would certainly take place on June 23 of this year.
Britain hasn’t even left the EU yet and the pound sterling has already dropped slightly in value against the dollar – last month was its lowest since the recession back in 2008. The U.S. investment bank said, as part of a client report: “An abrupt and total interruption to incoming capital flows in response to a 'Brexit' could see (pound sterling) decline by as much as 15-20%."
However, RAC spokesman Simon Williams recently said: “A 20% fall in the value of the pound would – based on current exchange rates – only add £2 to the cost of filling up an average 55-litre petrol car, as a result of the average price of a litre rising around 4p from 101.95p to 105.56p. This would mean a two-car household filling up with petrol twice a month would spend £232 as opposed to £224.”
UK motorists are currently enjoying lower fuel pump prices across petrol and diesel than we’ve seen in a while, with both priced at sub-£1 at the cheapest retailers. The cost of petrol and diesel has fluctuated much in the past few years, reaching a high then gradually lowering as oil prices fell. However, fuel is generally priced against the dollar so if the pound sterling drops against it, it wouldn’t be a surprise if costs rose.
“While the strength of the pound is a significant factor in the price motorists pay for petrol and diesel due to wholesale fuel being traded in dollars, the oil price is currently a greater influence,” Williams added.
Car insurance could also be affected by an exit.
One of the biggest changes to car insurance in the UK came following the European Court of Justice ruling in 2012 that the industry could no longer take a customer’s gender into consideration when deciding premiums. George Osborne also indicated that insurance premium tax should also reflect other countries, last year, resulting in a rise from 6% to 9.5%. It is unclear as to whether these two policies will remain in play following an EU exit.
If ‘Brexit’ goes ahead, restrictions on trade with the remaining EU countries could also mean a rise in material costs that are imported here for use in British motor manufacturing. If manufacturers decide to keep trading with the additional cost, the UK could then be affected by a hike in car costs or even servicing and general maintenance.
However, despite the well promoted fact that car manufacturers want Britain to remain in the EU, giving them almost restriction-free access to trade and export, Toyota recently confirmed it will stay in Britain regardless of the referendum result, with Nissan boss Mr. Carlos Ghosn also recently releasing a statement, saying it had no plans to leave the UK: "We have a rich heritage in the UK with 30 years of manufacturing and engineering presence, and remain committed to building and engineering cars in the country. Last year we produced more than 475,000 vehicles in the UK – 80% of which are exported.
“Our preference as a business is, of course, that the UK stays within Europe – it makes the most sense for jobs, trade and costs. For us, a position of stability is more positive than a collection of unknowns.”
Ghosn finished by saying that, ultimately, it’s for the British people to decide.
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