The 1,000-plus Japanese companies operating out of the UK are resolutely against a no-deal Brexit, according to the country’s foreign minister.
Taro Kono, Japan’s foreign minister speaking on the BBC’s Today Programme said he was “very concerned” about the implications of a no-deal Brexit and the “very negative impact” it would have on the Japanese companies based in the UK. Speaking ahead of this weekend’s G20 meeting of world leaders in Osaka, he urged the Conservative leadership contenders to avoid a no-deal exit from the EU.
It might not be usual for Japanese politicians to wade into UK politics, but then these are not ‘normal’ times. And with the no-deal Brexit at the heart of the current Conservative leadership contest, between Boris Johnson and Jeremy Hunt, Britain’s position as the gateway to the rest of Europe is set to loom large.
Earlier this week the Society of Motor Manufacturers and Traders, the trade body that represents UK-based car manufacturers, said leaving the EU without a deal would deliver a “knockout blow”, not to mention potentially cause “crippling disruption” to the industry.
According to its analysis, if the 1,100 trucks that deliver the 42 million or so components from the continent to the UK every day were held up for just 24 hours, the resulting stoppages could cost the industry about £50,000 a minute.
For the Japanese to be so concerned is no surprise, as some of their largest car manufacturers operate out of the UK. But their concern should also be of great concern to UK Plc, seeing as the car industry relies so heavily on Japan’s commitment to the UK car industry. Let’s not forget that Britain’s ailing car industry was revived by a raft of inward investment, led by Japanese manufacturers, in the 1980s and 1990s.
Yet already the Brexit effect has made its mark; even if the industry has been careful not to cite a no-deal Brexit as the reason. Japan’s Honda plans to close its Swindon car plant, citing commercial reasons. And Nissan has cancelled production of several vehicle models from its Sunderland plant.
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Beyond Japanese involvement, Ford’s decision to shut its Bridgend factory with the loss of 1,700 jobs in 2020 also highlights the fragility of the UK car industry. So does the situation at Jaguar Land Rover, owned by India’s Tata, which faces questions over the future of its Castle Bromwich plant.
It’s certainly likely to concern investors about where in the world opportunities, growth - and any sort of stability - lies.
I spoke to Ayesha Akbar, manager of the Fidelity Select 50 Balanced Fund, recently about this very issue and the problems such political turmoil generates. She told me how she copes when it comes to running a global portfolio. We discussed everything from trade wars to Brexit and Ayesha explained the stance she takes when it comes to weighing up the risks. Interestingly, she also explained that she’s seeing value emerging close to home, in the UK and also in Europe.
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