UK Lockout from Made in Europe Law Hurts EU Car Industry 2026

The UK's potential exclusion from the EU's Made in Europe law could significantly hurt carmaking across the entire continent, according to Mercedes-Benz CEO Ola Källenius. Speaking as president of the European Automobile Manufacturers' Association (ACEA), Källenius warned that locking the UK out of the flagship industrial legislation would be a "deliberate choice" by EU leaders to damage the bloc's own automotive sector.

What is the Made in Europe Law?

The Industrial Accelerator Act (IAA), commonly known as the Made in Europe law, is a flagship EU legislative package designed to protect local industry by countering competition from outside the bloc. While primarily aimed at China—which enjoys a £1bn daily trade surplus with the EU—the act has raised concerns for close allies including the UK, Norway, Turkey, and Switzerland.

The legislation aims to boost European industrialization and build local supply chains. However, if the UK is excluded, British carmakers could be shut out of key EU contracts, potentially weakening the integrated European automotive market.

Why the UK Lockout Hurts EU Carmaking

Källenius argues that excluding the UK makes no economic sense. "It does not make any sense … We would hurt our industry in the UK and the EU. That would be a deliberate choice to worsen the competitiveness of your own [EU] industry," he said at an annual briefing in Brussels.

The European car industry is highly integrated, with components and vehicles crossing borders multiple times during production. Disrupting this flow would increase costs and reduce efficiency for manufacturers on both sides of the Channel.

Key Takeaways

• Integrated supply chains: The UK and EU automotive sectors are deeply interconnected, and excluding the UK would disrupt production.
• Competitiveness concerns: EU carmakers fear that a UK lockout would make them less competitive globally, especially against China.
• Political pressure: Andy Burnham and others are lobbying hard to include the UK in the Made in Europe legislation.
• Timing: EU leaders hope to reach an agreement on the IAA in the coming weeks.

Comparing the Impact: UK In vs. UK Out

The Political Battle Ahead

Andy Burnham, the Mayor of Greater Manchester, has been actively lobbying to keep the UK within the Made in Europe framework. He argues that excluding the UK would harm jobs and investment in both the UK and the EU. However, he faces resistance from some EU member states who want to prioritize their own industries.

The coming weeks will be crucial as EU leaders aim to finalize the IAA. The decision will have far-reaching consequences for the automotive industry, affecting everything from electric vehicle production to traditional combustion engine manufacturing.

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