LONDON, July 7, 2018 /PRNewswire/ -- The warning could not have been starker. Jaguar Land Rover (JLR), the UK's largest car manufacturer, issued a strongly worded statement ahead of a crucial cabinet meeting to be held today, which is meant to provide a blueprint for the UK's controversial Brexit deal. In it, Prof. Dr. Ralf Speth, CEO, asserted: "A bad Brexit deal would cost Jaguar Land Rover more than £1.2 billion in profits each year. As a result, we would have to drastically adjust our spending profile."

He went on to add, "I don't want to threaten anybody but we have to make transparent the implications of the move. We want to stay in the UK. JLR's heart and soul is in the UK."

With this, JLR joined other major global companies, including Airbus, BMW, and Nissan who have openly expressed their fears about the potentially devastating impact of Brexit on their businesses. "If the UK automotive industry is to remain globally competitive and protect 300,000 jobs in Jaguar Land Rover and our supply chain, we must retain tariff and customs-free access to trade and talent, with no change to current EU regulations," warned Speth. 

"JLR has been a vocal proponent of free and frictionless trade with the EU for two principal reasons," explained Sarwant Singh, Senior Partner and Head of Frost & Sullivan's Mobility Practice. "Firstly, mainland Europe is one of the company's largest markets, where it sells nearly a fifth of its cars, and, secondly, Brexit could make it increasingly challenging for JLR to buy automotive components—due to import duties—and sell its products—due to sizeable levies on vehicle exports—in what constitutes its largest market."

The prospect of the UK exiting the EU in March 2019 is pressuring the British government to provide businesses with greater clarity and reassurances in a post-Brexit world.  Unfortunately, the continuing maelstrom of uncertainty has only made companies even more jittery about their ability to make a smooth transition.

As a result, the upcoming negotiations, which will bring together the entire British cabinet in the hope of agreeing on the UK's future relations with the EU, are critical. Once there is consensus, a whitepaper will be tabled to the EU as a basis for further negotiations. This outcome is doubtful, however, as the battle between hardliners and soft Brexiteers in the cabinet has only grown shriller in the past several weeks.

The Prime Minister's Office has indicated that among the plans being considered are allowing the UK to establish its own tariffs on goods being imported, and also determine which tariffs—the UK's or the EU's—will be imposed on these goods. Another proposal is to have the UK stick closely to EU regulations but allow Parliament the authority to determine where they should differ.

However, whether the cabinet will vote 'aye', in unison, on these proposals or, indeed, whether the EU will be amenable to them, remains unknown.

"Many businesses are understandably concerned about what kind of agreement will be hammered out today," noted Singh. "They will be rooting, no doubt, for a deal that reflects their own preferences and ensures that frictionless trade continues with mainland Europe."

The stakes are high at today's cabinet meeting. For JLR, an unfavourable outcome would spell an "unpredictable future." It could result in massive layoffs and put a huge question mark over an estimated £80 billion of investment envisaged for the next five years.

With projections like this, the cabinet would do well to take note: on their decision will rest not just the future of businesses like JLR but that of the entire British economy.

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