Japanese firms employ 140,000 people in Britain—and are watching on with concernby David Warren / February 23, 2018 / Leave a comment
“If there is no profitability of continuing operations in the UK, no private company can continue operation. It’s as simple as that,” the Japanese Ambassador said after major Japanese investors in the UK saw Theresa May at No 10 earlier this month. He made clear that he was not just speaking about Japanese firms. “This is high stakes that I think all of us need to keep in mind.”
Supporters of Brexit—both those who believe that it is worth paying any economic price to regain British sovereignty, and those who don’t accept that we are likely to have to pay such a price once we are a “free trading nation” again—react with frustration at such arguments. Can’t the Japanese see that a new “global Britain” is going to be as strong a future partner of Japan as we were as a member of the European Union? Wouldn’t a proud Japan want to take back control of its laws and regulations if it had been “shackled” to an economic union for the past 40 years?
The answer is “no.” Japanese government and business regard the prospect of Brexit with concern. Over the past 40 years, over 1,000 Japanese companies have invested in Britain. They employ more than 140,000 people directly, with hundreds of thousands more in supply chains. Much of their business depends on free and frictionless trade with the EU, Britain’s most important export market. Many Japanese firms were encouraged to come to the UK in the 1980s by Margaret Thatcher, on the basis that Britain was part of the single market and the customs union. Millions of cross-border transactions are taking place, undocumented, because of that status. It was a powerful incentive to Japanese firms to make their European base in the UK.
That position is now under threat. Publicly, Japanese officials refer to their government’s hope that as much as possible of the current arrangement can be preserved. Privately, there is talk of “betrayal.” There is also bewilderment that Britain appears hell-bent on an act of economic and political self-harm. In the Japanese worldview, a country’s political clout depends on its economic power. Leaving the EU—and certainly leaving the economic structures that have supported business growth since the 1980s—will, in their…