Brexit: Ford's European chief said pound slump could cost the car manufacturer $600m in 2017

Sterling has fallen about 16 per cent against the dollar and about 10 per cent against the euro since the referendum in June

Ford makes 2 million engines in the UK and employs 15,000 staff, Mr Farley said (AP)

The chief executive of Ford in Europe has warned that the slump in the value of the pound since the Brexit vote could cost the company as much as $600m (£478m) this year.

Sterling has fallen about 16 per cent against the dollar and about 10 per cent against the euro since the referendum in June.

In an interview with the BBC on Friday, Jim Farley, the chief executive and chairman of Ford Europe, said the firm would have “a lot of work to do in 2017 to offset the headwinds of sterling”.

Ford makes two million engines in the UK and employs 15,000 staff, half of them engineers working on products sold worldwide, according to Mr Farley.

He said: “We have more employees here than Nissan; we have more than Toyota and Honda combined in this country. That's why the agreement between the UK and EU is so critical.”

Last week, Prime Minister Theresa May said that the UK planned to leave the single market and that she would aim to conclude a free trade with the rest of the EU.

Another fear for car manufacturers is the prospect of the UK leaving the EU customs union, which would entail costly “rule of origin” checks at customs.

In her speech, Ms May hinted at the prospect of a compromise to preserve some elements of the customs union with the EU for specific sectors. However, the legality and practicality of such an arrangement is unclear.

Carlos Ghosn, the chief executive of Nissan, last week said the firm's UK investments will be “re-evaluated” if Ms May delivers a bad Brexit deal, despite last October's high-profile commitment by the firm to build its next Qashqai and X-Trail model at its Sunderland plant, securing more than 7,000 jobs.