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No-deal Brexit would force Japanese investors to reassess 40-year bet on UK

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No-deal Brexit would force Japanese investors to reassess 40-year bet on UK

By Guy Faulconbridge and Costas Pitas

 

2019-09-20T145855Z_2_LYNXMPEF8J1J8_RTROPTP_4_BRITAIN-EU-JAPAN.JPG

Koji Tsuruoka, Japan's ambassador to the UK speaks during an interview at the embassy in London, Britain September 20, 2019. REUTERS/Simon Dawson

 

LONDON (Reuters) - Japanese companies and investors would be forced to reassess their four-decade bet on the United Kingdom if there is a disorderly exit from the European Union that shattered supply chains and cut off access to the bloc, Japan's ambassador said.

 

Japan, the world's third-largest economy, made the United Kingdom its favoured European destination for investment. The likes of Nissan <7201.T>, Toyota <7203.T> and Honda <7267.T> were encouraged by former Prime Minister Margaret Thatcher to use the country as a launchpad into Europe.

 

Brexit, though, worries Japanese investors. Many have expressed concern in private that a disorderly exit could turn upside down the entire business case for investing in British manufacturing.

 

Japan is one of the biggest sources of foreign direct investment in Britain, which its companies have long seen as a pro-business, liberal gateway into the rest of the EU.

 

"If those conditions drastically change and make it impossible for companies to adapt, they will have to consider very carefully how they will go about continuing business here in the UK," Japan's ambassador to London, Koji Tsuruoka, told Reuters.

 

"They like it here and they are happy being here," Tsuruoka said. "The only hope that they are now wishing is that they will be allowed to continue to do good business here in the UK."

 

Japanese companies have invested over 81 billion pounds in Britain, making its FDI the fifth-largest after the United States, Germany, France and the Netherlands, according to UK statistics.

 

More than three years of political squabbling over Brexit have left allies and investors puzzled by a country that for decades seemed a confident pillar of Western economic and political stability.

 

It is still unclear on what terms the United Kingdom will leave the European Union. Options range from a last-minute exit deal or delay to an acrimonious split that would knot up the networks of trade.

 

"NOT TOO MANY ANSWERS"

 

Prime Minister Boris Johnson has repeatedly said he wants to strike a deal at an Oct. 17-18 EU summit, but if the EU turns down British demands he will lead the United Kingdom out without a deal on Oct. 31.

 

Without a deal, Britain would quit the EU's 500 million-strong single market and customs union overnight, falling back on World Trade Organisation rules, which could mean many import and export tariffs. There would be no transition.

 

Tsuruoka said he was hoping for an orderly exit. Nearly 1,000 Japanese companies based in Britain employ more than 150,000 people.

 

"The UK has provided Japanese companies and investors with very important business opportunities, which they have profited from now for three or four decades," Tsuruoka said.

 

"The question really is whether this will drastically changed or will there be a continuity of the sound business environments they have enjoyed," he said. "There are not too many answers that are available today and therefore they are watching very carefully."

 

Car makers, the country's biggest exporter of goods, has been one of the most vocal opponents of a no-deal Brexit, warning that production would be hit with tariffs, border delays and new bureaucracy, ruining the viability of many plants.

 

Of the just over 1.5 million cars produced in Britain last year, Japanese auto makers Nissan, Toyota and Honda built about half.

 

"The Japanese companies that are investing are global operators and they are watching it very carefully," Tsuruoka said.

"If none of the predictability is there, then you cannot plan, so you will have to stop and then consider when things are clear."

 

British trade minister Liz Truss is currently on a visit to Tokyo and has called for a new post-Brexit trade agreement with Japan as soon as possible.

 

"I am in Tokyo today to deliver one very clear message: the UK is ready to trade," Truss said. "The UK is an open, welcoming country and we are the perfect place to do business."

 

(Reporting by Guy Faulconbridge)

 

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-- © Copyright Reuters 2019-09-21
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5 hours ago, rooster59 said:

we are the perfect place to do business."

Just no longer a "launch pad" into the EU.

More of crash landing site for Japanese autos?

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Shame the UK sold off the car industry to others. Is there anything left in the country that is owned by the British?

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15 minutes ago, the guest said:

Shame the UK sold off the car industry to others. Is there anything left in the country that is owned by the British?

Mostly the UK auto manufacturers were sold off because they were failing. So there wasn't a lot of choice involved. It's a pity that they weren't better run.

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What a stupid thing to be said by an ambassador, 17.4 million people voted for a hard brexit ie a leave vote so in one moment of stupidity he has risked British people boycotting Japanese vehicles. I am looking to buy a new Rav 4 next year now I will seriously think of changing my purchase to a country that shuts its mouth and keeps out of British politics. Even yesterday I went to buy something saw it was made in France and because of Macron I decided not to buy it. 

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Worth noting that the successful island nation of Japan would never consider ceding sovereignty to an undemocratic supra-national entity controlled by a major competitor.

I am surprised by how relentlessly the British media present every Brexit-related story as negatively as possible. I am not saying that there are not inevitably going to be problems with extracting yourself from such a tightly-woven system, but no news report ever seems to mention the downsides of staying in. The situation is less than ideal, but I don't see what other choice the British have if they want a say in their own future, and to operate in their own best interests.
 
 
Cheaper Anchor Butter probably.

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52 minutes ago, Scot123 said:

 

 

 

I am looking to buy a new Rav 4 next year now I will seriously think of changing my purchase to a country that shuts its mouth and keeps out of British politics. Even yesterday I went to buy something saw it was made in France and because of Macron I decided not to buy it. 

 

It is probably not about politics, but economics, money. Large multinationals, based in UK, but aiming at EU market, no longer have a reason to be UK based.

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What a stupid thing to be said by an ambassador, 17.4 million people voted for a hard brexit ie a leave vote so in one moment of stupidity he has risked British people boycotting Japanese vehicles. I am looking to buy a new Rav 4 next year now I will seriously think of changing my purchase to a country that shuts its mouth and keeps out of British politics. Even yesterday I went to buy something saw it was made in France and because of Macron I decided not to buy it. 
Should be good for Aston Martin sales.

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