The Japanese government has used the start of the G20 Summit to warn Britain of the “great turmoil” that is to come if Brexit leads to the loss of single market privileges.
An official Japanese government task force has collected views of big corporations in the country and produced a 15-page list titled “Japan’s message to the UK and the EU”, detailing requirements from Brexit negotiations and the consequences if these requirements are not delivered.
The report concludes that “Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to Continental Europe if EU laws cease to be applicable in the UK after its withdrawal.
“In light of the fact 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, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”
Nigel Driffield, of Warwick Business School, said it is unlikely that even if the post-Brexit world were not to the liking of Japanese investors they would move over night. However, he warned that we should bear in mind that Japanese car firms invested some £260 million in the 4 years up to 2014 in the UK.
“Virtually all of this took the form of re-tooling or updating rather than new greenfield investment, and it is that which over time would drift away were the UK to divorce itself from the single market.
“At the same time, it is important to recognise that well-known Japanese firms in the UK are in locations with high unemployment, where the firms themselves are at the centre of wider networks and supply chains.
“Were those firms to relocate, or prioritise other production facilities elsewhere, then the number of jobs under threat greatly exceeds the number employed in just the inward investors themselves.
Japanese investment in the UK has been significant since the 1980s, and while Japan only represents about three per cent of the total FDI that comes into the UK, it is much higher in certain high profile sectors, such as automotive, and in sectors with very close trading links to the EU.