Made in Europe relies on maintaining production links with the UK

Europe has a sound economic reason to strengthen its manufacturing base, but that ambition needs to reflect how goods are made. As the EU develops its Made in Europe policy, it must recognise the UK’s continuing role in European production networks.

Parts, machinery, and services produced in the European Union enter UK production facilities, whose output can then return to EU customers. Brexit changed the trading framework, but it did not remove these production links. A decision that reduces demand for UK production risks also reducing orders for its EU suppliers.

The European Commission’s proposed Industrial Accelerator Act would use public purchasing and support to encourage cleaner, more resilient production. It proposes different low-carbon or origin requirements for steel, cement, and aluminium; clean technologies such as batteries, solar and wind equipment, and heat pumps; and electric vehicles and their components. The rules vary by product and form of public support.

Our analysis for SMMT puts a scale on those links for the UK automotive sector. In 2024, around €20 billion of UK automotive production was exported to the EU. That output was associated with an estimated €5.6 billion of spending on EU-produced goods and services, supporting an approximately 58,000 jobs and €1.6 billion in tax revenues. The economic links extend beyond factories to sectors including wholesale and retail trade, transport, professional services, real estate and utilities.

These are estimates of existing economic activity potentially exposed, not a forecast of losses. Using Oxford Economics’ Business Economic Impact Calculator, we traced purchases through EU supply chains and the spending of workers’ wages.

Under the Commission’s March draft, most UK content would generally count as equivalent to EU origin. The European Commission has identified stricter conditions for electric and hybrid vehicles, however, and the legislation remains under negotiation. For automotive, metals, construction materials and clean technologies, workable rules should support new low-carbon capacity while recognising the value already created across UK–EU supply chains. Maintaining those connections is an important part of competitiveness for both economies.