Japan pleads with Britain to avoid a “no deal” Brexit

Japan’s prime minister and representatives from its biggest companies have been unusually vocal on the topic of British politics this week.

They are worried that a so called “no deal” Brexit could severely disrupt the business of Japanese companies based in the UK, especially car manufacturers.

More than one thousand Japanese companies operate in Britain and provide more than 140,000 jobs. Japan is the second largest investor in the UK, after the United States.

Abe meets May

When Prime Minister Shinzo Abe met his British counterpart Theresa May at the G20 summit in Buenos Aires at the weekend, he pressed her to avoid no deal, as well as to ensure transparency, predictability and legal stability in the Brexit process.

Mrs May assured him that her plan was a good deal for business, including Japanese companies, who she said would be able trade well with the European Union.

Political problems

ITV’s political editor Robert Peston wrote about the meeting in his blog. He said: “When the Japanese PM publicly calls on May for “support to avoid no deal” – as he did in Argentina – because of the damage trade friction at the border would do to important Japanese companies with big factories in the UK, it is very hard for the PM to plausibly argue that she would simply let chaotic events drive the UK to the cliff edge of an un-negotiated withdrawal from the EU.”

However, when Mrs May came back to London she was reminded of the enormous political difficulties in implementing her plan. The government was defeated in several votes in the House of Commons on Tuesday and it is unlikely that MPs will back the prime minister’s proposals next week.

Toyota’s view

The car maker Toyota usually avoids politics but it sent its representative

Tony Walker to the House of Commons this week. He told a business committee that a no deal would be “very, very challenging” and would have a big impact on Toyota’s factory at Burnaston in Derbyshire.

Toyota exports the majority of the cars it makes there to mainland Europe. It relies on parts imported into Britain through the Channel Tunnel from France.

However, Mr Walker said Toyota is a “pragmatic” company and he was careful not to say that the British factory would close as a result of Brexit.

Soon after the result of the referendum was announced in 2016, the Financial Times predicted a 75% chance that Toyota and Honda would cease manufacturing in the UK if the Brexit leads the EU to impose an import levy on cars manufactured in Britain.

Nissan

The Times newspaper also reported that Nissan, which employs 7,000 people in the North East of England, is under pressure from its partner Renault to move some operations to France. That was before the arrest of the Nissan chairman Carlos Ghosn in Tokyo last month. He still hasn’t been charged with any crime.

Takeda’s deal

Despite all the worries about Brexit, Japanese companies are still active in the UK and Ireland. This week, Takeda Pharmaceutical won shareholder approval for a £46bn ($59bn) takeover of UK-listed drugmaker Shire.

If it goes through this will be Japan’s largest ever corporate acquisition and the takeover is part of Takeda’s strategy to become a global pharmaceutical company.

 

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