Brexit could see Japanese car companies leave UK

Japan is warning that it wants clarity promptly as to the direction of Brexit negotiations or its businesses could start leaving the UK.

Japan has a lot of skin in the Brexit game.

Nearly half of Japan’s EU investment flowed into the UK in 2015 according to a government report released yesterday at the start of the G20 meeting of leaders in Hangzhou, China. Nissan has its European design and research departments in the UK, Nomura, an investment bank, has its European headquarters in London in addition to other Japanese financial firms, and Honda, Mitsubish, and Daiwa all have operations in the country.

The report says Japan saw the UK as ‘a gateway to Europe’, and now it wants to know if the gateway is swinging shut.

At the meeting a Japanese government taskforce delivered a warning to the UK that uncertainty is a major concern for an economy as it evokes a sense of anxiety, causing volatility in markets and resulting in the contraction of trade, investment and credit.

The 15-pages(pdf) report entitled ‘Japan’s Message to the United Kingdom and the European Union’ effectively underscores that Japanese companies want clarity quickly.

“What Japanese businesses in Europe most wish to avoid is the situation in which that they are unable to discern clearly the way the Brexit negotiations are going, only grasping the whole picture at the last minute,” says the report.

The government message includes detailed requests from companies in the automotive, pharmaceutical, and banking sectors to determine whether workers will remain available both now and in the future, whether parts and finished cars will be taxed twice, whether skilled bankers will have freedom of movement, and whether drug regulation will be destabilised.

If negotiations don’t lead to satisfactory decisions, businesses could leave, the message says.

The authors of the report note that “a number of Japanese businesses, invited by the Government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value chains across Europe,” going on to “strongly request” that the UK consider Japanese interests in its decision-making.