What the EU referendum means for drivers?

What the EU referendum means for drivers?
We look at the issues that may affect motorists in relation to the EU referendum.

The build up to the referendum saw a flurry of claims, counter-claims, slip-ups and smears as tensions escalated between the rival factions: Britain Stronger In Europe and Vote Leave.

As an issue affecting jobs, household budgets and freedom of movement, motoring is at the heart of the referendum. So what are the potential effects? We take a dispassionate look at how Brexit could affect the UK’s 45 million drivers. 

Buying a car

There’s little hard evidence to suggest that Brexit would make buying a car more expensive. The UK is one of Europe’s largest car markets, and manufacturers will be keen to stay competitive.

Nonetheless, both Goldman Sachs and HSBC have predicted a fall in the pound’s value by 20% against the euro if Britain leaves Europe. That could have a short-term effect on the cost of new cars – and car parts – imported from Europe.

Longer-term, trade tariffs between the UK and EU would need renegotiation. Unfavourable deals could lead to cars becoming cheaper abroad – and perhaps the return of unofficial ‘grey’ imports from Europe.

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Petrol and diesel prices

The UK is already one of the most expensive places to fill your tank in Europe. At the time of writing, RAC Fuel Watch indicates an average price of £1.11 for a litre of petrol or diesel. That compares to £1.11 for petrol and 92p for diesel in France, and 95p/80p in Spain.

Some commentators have predicted steep post-Brexit price increases of up to 19p per litre. However, RAC fuel spokesman Simon Williams advised caution, saying: “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. This would mean a two-car household filling up with petrol twice a month would spend £232 as opposed to £224.

“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.”

Breakdown cover and insurance

With a wide network of patrols across Europe, an ‘Out’ vote would not affect the RAC’s ability to rescue stranded motorists and get them back on the road.

The consequences for car insurance are less certain. The EU Motor Insurance Directive, which guarantees that drivers are insured throughout Europe, may no longer apply – potentially increasing the cost of cover for driving abroad.

A 2012 European Court of Justice ruling that insurance companies could not take a driver’s gender into account when setting premiums could also be abandoned. In theory, that would lead to higher prices for men, but significant savings for women. 

Driving in Europe

Britain has never been part of Europe’s passport-free Schengen area, so existing passport checks will remain at borders. However, new controls could be imposed at the UK’s only land border – between Northern Ireland and the Republic of Ireland – if we vote to leave.

Once inside the EU, British drivers would still be able to travel freely, with healthcare costs covered by the existing European Health Insurance Card. Length of stay could be limited, though. Many non-EU nationalities are restricted to 90 days maximum without a visa.

New trade agreements post-Brexit would almost certainly mean tighter Customs controls. This could lead to delays when leaving or entering the UK, and spell the end of the cross-Channel booze cruise, as personal allowances for alcohol and cigarettes are likely to be reduced. On the flip side, we could see the return of duty-free shopping at ports and on ferries. 

The UK motor industry

Nearly 1.6 million cars were built in the UK in 2015, and 77% of those were exported – with 57.5% sold within the EU. So it’s perhaps unsurprising that, in a survey by the Society of Motor Manufacturers and Traders, 77% of motor industry businesses want to remain.

Some car companies, such as Ford, BMW and Vauxhall, have expressed concern about what Brexit means for business. However, Vote Leave argues that lower immigration will actually mean more jobs for British workers.

Mobile phone bills

Nobody travels without a mobile phone nowadays, but the cost of making calls and surfing the web abroad could be affected by Brexit. After a spate of four-figure phone bill horror stories, the EU capped roaming charges at 4p per minute for calls, 2p for text messages and 4p per MB of data.

These additional charges will removed altogether in June 2017 – if Britain stays in Europe. If we vote to leave, the Association of British Travel Agents (ABTA) predicts costs will increase – bad news for anyone who uses their mobile phone as a sat nav.