Aurelia Butler

German carmakers are lobbying the European Commission to delay post-Brexit rules that threaten to deliver a severe blow to Britain’s troubled car industry.From next year, electric vehicles shipped between the UK and the EU will need to have 45 per cent of their parts sourced from within the two regions or face 10 per cent tariffs, under “rules of origin” terms set out in their post-Brexit trading agreement.With many of the batteries still sourced from Asia, EVs are likely to fall foul of the new threshold and incur the tariff, which Vauxhall and Peugeot owner Stellantis warned on Tuesday might force it to shut its UK plant at Ellesmere Port.VDA, the German car industry lobby group, said on Wednesday that “we must urgently make adjustments” to the agreement because the European battery industry had not developed fast enough and tariffs would place “a significant competitive disadvantage for the European car industry in relation to its Asian competitors in the so important UK market”.The intervention is the belated fulfilment of Brexit advocates’ hope that German carmakers would step in to EU-UK negotiations to protect their own sales.But it comes as the UK industry is going into the electric transition with significant post-Brexit headwinds. Homegrown battery manufacturer Britishvolt collapsed this year and Tata Motors, owner of Jaguar Land Rover, is demanding large amounts of government aid to place a significant battery plant in the UK rather than the EU.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Jeremy Hunt, chancellor, said on Wednesday to “watch this space” when it came to new factories in Britain, a sign that ministers remained hopeful that a deal with Tata could be done.Hunt said: “Everyone is trying to develop the supply of EV batteries, so we need to have that supply here in the UK. The closer it’s located to the factories that are making the rest of the car, the better.”Officials briefed on the talks said “negotiations are continuing” with Tata, with one adding: “We have a generous package on the table. We are keen to land this major investment for the UK.”Another official said Rishi Sunak, prime minister, and Grant Shapps, energy secretary, were personally leading talks with Tata. “It could still come to the UK — they’ve done a good job,” the official said.In the UK parliament, Labour’s shadow business secretary Jonathan Reynolds said the government needed to “wake up, grab the steering wheel and get control of the situation before it is far, far too late”.He added: “It is a statement of the blindingly obvious that the lack of battery-making capacity in the UK, combined with changes to the rules of origin, was a car crash waiting to happen.”Downing Street said ministers were talking to Brussels about extending the 2024 tariff “cliff edge” for carmakers. “We have raised it with the European Commission. We recognise it’s a problem, not just for us but for them too. We need to find a solution.”However, an EU official said Brussels was “not open to changes to the rules of origin”. “Stakeholders have been given the time to adapt, and they are advised to use the transition time provided,” the official added.The EU is nonetheless facing a growing clamour from carmakers inside and outside the bloc. The European Automobile Manufacturers’ Association (Acea) said it was “calling on the European Commission to extend the phase-in period for the rules of origin for batteries beyond January 2024, as the establishment of a fully integrated battery supply chain in Europe is simply not taking off quickly enough to keep in line with more restrictive rules”.Jaguar Land Rover called the timing “unrealistic and counterproductive”. Ford, which makes electric cars in Germany and parts in the UK, called for a delay to 2027 and said, if implemented as planned, the requirement would add “pointless cost to customers wanting to go green”. “Tariffs will hit both UK- and EU-based manufacturers, so it is vital that the UK and EU come to the table to agree a solution,” it added.Although the UK imports more electric cars from Europe than it sells into the market, carmakers in Britain have far higher exposure to the EU than rivals in Germany or France have to the UK. More

Today’s top storiesGlobal temperatures are likely to exceed 1.5C above pre-industrial levels within the next five years, the World Meteorological Organization warned in its latest annual assessment. Rating agencies warned of the impact of ageing populations on public finances across the world, as interest rates rise alongside higher pension and healthcare costs. Government credit ratings are likely to be downgraded without sweeping reforms.Bank of England governor Andrew Bailey admitted the UK was suffering a wage price spiral after official data showed little let up in wage growth in the three months to March, reinforcing concerns over pressures fuelling inflation. For up-to-the-minute news updates, visit our live blogGood evening.If you harboured any thoughts that Brexit might finally be “done”, think again. Stellantis has become the first carmaker to urge the UK government to renegotiate the terms of the Brexit trade deal, in this case to stop its electric vehicle exports becoming uncompetitive, just as the global industry pivots towards an electric future, encouraged by green tech subsidies in the EU, US and China.The company, which owns brands such as Fiat, Peugeot and Chrysler, warned it might need to close its Ellesmere Port factory because its electric vans will face tariffs of 10 per cent when exported to mainland Europe from next year because they will not contain enough locally sourced parts to satisfy beefed-up EU “rules of origin”. Stellantis told a parliamentary committee that the Ukraine war, rising costs of raw materials and supply chain issues meant it could no longer meet the content standards envisaged when it announced its investment in the Cheshire plant in 2021. (Read our explainer for more detail on rules of origin and the impact of tariffs.)The carmaker however is not alone in its concerns over the new rules. Its call to delay their introduction was echoed by carmakers across the UK and Europe, who worry they will push up the price of electric vehicles and slow public uptake.The new concerns come as the industry steels itself for a wave of increased competition from China. Competition is intensifying within China too, causing Ford to announce yesterday it would scale back its EV investments in the country.The lack of a homegrown battery industry is a big part of the problem, meaning UK carmakers will need to rely on imports for a while to come. Hopes of building a domestic supplier were dealt a blow in January when Britishvolt collapsed into administration. As columnist Helen Thomas notes, the UK has neither successfully struck deals with established Asian battery companies to build in Britain, nor nurtured domestic start-ups, a problem echoed last week by the head of luxury-car maker Bentley. Tata Motors, owner of Jaguar Land Rover, is yet to decide whether to build a battery factory in the UK or Spain in a decision said to be pivotal for the future of the British industry. It has demanded more than £500mn of government aid to swing its decision.In the meantime, the UK’s competitors have been busy promoting investment in green tech, including electric vehicle production. The US has already laid out a generous scheme of subsidies, stoking a global arms race to woo investors. France yesterday launched a package of measures, including tying subsidies for electric cars to environmental restrictions that would favour European manufacturers. Mainland Europe is also racing to build battery factories. Northvolt, Europe’s main battery maker, is building a plant in Germany after the federal government promised state aid, while Taiwanese manufacturer ProLogium is building one in France. The UK car industry however remains particularly vulnerable and is struggling to adapt to an electric future after being painstakingly rebuilt through investment from Japan, Germany and India before being dealt a blow from Brexit. The situation adds to concerns from business that the country lacks an industrial strategy.Need to know: UK and Europe economySome of those inflationary pressures in the UK include utilities “ripping off” customers, according to the country’s competition tsar, who said shareholders in water and energy monopolies should get steady but unspectacular returns. New official data showed more than 3mn Britons were struggling to keep up with bills and payments.Russia exported more oil in April than in any month since its invasion of Ukraine, with almost 80 per cent of crude shipments flowing to China and India. The EU was urged to crack down on imports of Indian fuels made with Russian oil.Western nations are steeling themselves for five more years of Recep Tayyip Erdoğan as Turkish leader, a president they view as troublesome and unpredictable, but also an essential Nato partner adjoining the Middle East and the Black Sea. Rating agencies warned that Erdoğan’s ‘unsustainable’ economic policies risked a lira sell-offA new Big Read examines proposals for a digital euro. Policymakers are eager to step up preparations but are struggling to communicate convincing arguments over why it’s needed.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Need to know: global economyG7 leaders gather in Japan this weekend amid global fears of a US debt default, deepening division over energy policy and no end in sight for the Ukraine war. For hosts Japan, the top challenge will be to engineer a unified response to China’s military ambitions. British prime minister Rishi Sunak suggested the UK was considering following Washington’s lead by imposing new restrictions on domestic companies making investments into critical industries in China.Chief economics commentator Martin Wolf delves into the “theatre of the absurd” that is the US debt ceiling debate. Talks are inching forward, but Treasury secretary Janet Yellen warned of a jump in US borrowing costs. Here’s an explainer.Industrial output in China fell short last month, raising doubts about the country’s economic recovery.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Japan came out of recession as household spending and tourism bounced back, sending stocks to a 33-year high. Exports and manufacturing however remain fragile.Brazil’s powerful house speaker, the conservative Arthur Lira, vowed to stop Luiz Inácio Lula da Silva taking any “backward steps” on economic reform and prevent the overhaul of business-friendly laws. Ecuador’s rightwing president Guillermo Lasso, who is facing impeachment charges, has dissolved the opposition-controlled parliament, triggering elections.Need to know: businessA UK parliamentary committee called for cryptocurrency to be regulated like gambling, rather than as a financial service, which could give the impression the industry is “safer than it is”.Norway’s $1.4tn oil fund will step up its use of shareholder proposals to send messages on environmental, social and governance issues to US companies after a successful test.South Korea is getting tough on tech leaks to Chinese companies, which are becoming more aggressive in acquiring expertise in critical technologies, from semiconductors to electric-car batteries and industries including displays and shipbuilding.Our Behind the Money podcast tackles the burning question: Why don’t companies want to list in the UK anymore?The World of WorkDo you ever feel invisible at work? Isabel Berwick and guests discuss how to build your profile and “personal brand” in the new Working It podcast.Would it be unwise to leave a well-paid job to pursue a career in film? FT careers expert Jonathan Black and FT readers proffer some advice.Some good newsNew tech such as drones and solar-powered camera traps are enabling indigenous guardians of the Amazon to fight illegal logging. More

Brussels will sign up to a deal with the UK to boost co-operation on the regulation of financial services, in a further sign of improved relations following this year’s settlement of the long-running dispute over Northern Ireland trading arrangements. The European Commission said on Wednesday it had adopted a draft memorandum of understanding that would create the framework for voluntary regulatory co-operation, including the establishment of a joint EU-UK Financial Regulatory Forum. This will improve co-ordination between the two sides and replicate arrangements the EU already has with other major jurisdictions including the US. The MOU, which will now need to go to the EU member states for sign-off, was stalled for two years because of the fractious relationship between London and Brussels following the signature of the Trade and Cooperation Agreement that set out post-Brexit trading relations. It is the latest sign of a thaw between the two sides since they settled the Windsor framework in February in a bid to improve trade between Great Britain and Northern Ireland.“The Windsor framework allowed the EU and the UK to open a new chapter in our partnership based on a spirit of mutual trust and co-operation,” said Mairead McGuinness, financial services commissioner. “I am confident that our relationship and future engagement in financial services will be built on a shared commitment to preserve financial stability, market integrity, and the protection of consumers and investors.”The draft MOU aims to foster exchanges of views and analysis on regulatory developments and markets, boost dialogue when it comes to making equivalence decisions and step up co-operation in international regulatory bodies. Nicola Watkinson, managing director, international, TheCityUK, a lobby group, said: “The MOU on financial services has been a long time coming and this progress is another positive step forward in building relations between the UK and the EU.” She added: “We hope it will have a mechanism for engaging industry on discussions relating to regulatory co-operation and look forward to further progress being made.”

But Brussels warned firms the MOU would not in itself improve cross- border access to financial markets. “The MOU does not deal with the access of UK-based firms to the single market — or EU firms’ access to the UK market — nor does it prejudge the adoption of equivalence decisions,” a commission spokesperson said.The commission has granted equivalence only to UK-based derivatives houses, which are allowed to continue euro-denominated trading until June 30 2025, while the block builds up its own capacity in the sector. Finance bosses are lobbying the commission to consider a further extension to this deadline, but Brussels has signalled this would be a decision for after the European elections in summer 2024. UK prime minister Rishi Sunak has sought to strengthen ties with Europe on a range of issues, including the war in Ukraine and co-operation over migration, following years of tension under former prime minister Boris Johnson.Andrew Griffith, economic secretary to the Treasury and City minister, said: “We welcome the positive news that the EU Commission is proceeding with the adoption of the Memorandum of Understanding on Regulatory Cooperation in Financial Services. As we have previously said, the Treasury stands ready to sign the MoU and we look forward to setting up the forum as soon as possible this year.”Additional reporting by Laura Noonan in London More