Japan warns firms could leave U.K. if Brexit makes them unprofitable
LONDON • Japan warned Prime Minister Theresa May on Thursday that its companies would have to leave Britain if trade barriers after Brexit made them unprofitable.
Japanese firms have spent more than 40 billion pounds ( US$ 56 billion) in Britain, encouraged by successive governments since Margaret Thatcher that promised a business- friendly base from which to trade across the continent.
After May and several of her top ministers met bosses from 19 Japanese businesses, including Nissan, SoftBank and bank Nomura, Japan’s ambassador to Britain i ssued an unusually blunt warning on the risks of trade barriers.
“If there is no profitability of continuing operations in the U.K. — not Japanese only — then no private company can continue operations,” Koji Tsuruoka told reporters on Downing Street when asked how real the threat was to Japanese companies of Britain not securing frictionless trade.
“So it is as simple as that,” he said. “This is all high stakes that all of us, I think, need to keep in mind.”
Japan, the world’s thirdlargest economy, has expressed unusually strong public concerns about the impact of Brexit on the United Kingdom, the second- most important destination for Japanese investment after the United States.
In a warning after the shock 2016 Brexit vote, Japan expressed fears about a cliff edge that could disrupt trade when Britain formally leaves the bloc in March 2019.
Major corporations have sought a two-year transition period, which they hope will bridge Britain into its new relationship with the bloc and allow businesses to make preparations for any trade or regulatory changes.
Both London and Brussels hope to reach a transition deal lasting until the end of 2020, in which Britain would remain in the single market and be bound by all EU laws, by a March 22-23 summit.
May and her ministers assured Japanese businesses of the importance of maintaining free and frictionless trade after Brexit during the meeting but said nothing firm on the matter, a source familiar with the discussions told Reuters.
“The point about frictionless trade and tariff- free trade was made in the meeting and acknowledged by the government and all sides as being important but nothing firm,” said the source, who spoke on condition of anonymity.
The meeting with Japanese investors came after ministers discussed their Brexit strategy including how closely Britain should remain aligned with the EU and its customs union, a divisive issue for the ruling Conservatives.
Collectively, Nissan, Honda and Toyota, Japan’s largest automakers, build nearly half of Britain’s 1.67 million cars and the industry has warned that any loss of free and unfettered trade could hit its operations.