The Society of Motor Manufacturers and Traders (SMMT) is calling on the Government to reach an interim agreement with the EU in Brexit negotiations to avoid the motor sector 'falling off a cliff edge'.

The interim arrangement would maintain membership of the single market and customs union, until a final agreement on a new relationship with the EU is negotiated and implemented.

Speaking today, SMMT's chief executive Mike Hawes (pictured) said it was time to be pragmatic. Any new relationship would have to address tariff and non-tariff barriers, regulatory and labour issues, he said.

“We accept that we are leaving the European Union and we share the desire for that departure to be a success. But our biggest fear is that, in two years’ time, we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior WTO terms. This would undermine our competitiveness and our ability to attract the investment that is critical to future growth," he said.

“That’s why we have to be honest with ourselves. If the UK cannot secure – and implement – a bespoke and comprehensive new relationship with the EU in two years’ time, we need a back-up plan. Having looked at all the alternatives, we need government to seek an interim arrangement whereby we stay within the single market and customs union until that new relationship is implemented.”

In response, Close Brothers Motor Finance’s chief executive James Broadhead said: “The automotive industry is unquestionably one of the leading lights of the British economy, with turnover in 2016 totalling a record £71.6 billion. But despite having been an undeniable growth industry in recent years – with seemingly endless records set for car registration numbers – it’s difficult to dispute that we are entering into uncertain times for our industry, especially now Brexit discussions are under way.”