Japan issues dire warning to post-Brexit Britain

The Japanese government has issued a warning entitled ‘Japan’s message to the UK and the EU’ which details its requirements from Brexit negotiations.

Making the list public at the G20 Summit, Japanese officials warned of great turmoil and harm caused if single market privileges are lost due to Brexit’s effects. There are also dire consequences if requirements are not met.

Nigel Driffield, a Professor of International Business at Warwick Business School has been researching the effects of Brexit on foreign direct investment into Britain.

He commented: "It is unlikely that even if the post-Brexit world were not to the liking of Japanese investors, they would move over night. However, one 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 percent 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.

"This is not merely in terms of the EU as the final export market for Japanese cars made in the UK, but many supply chains in these sectors cross several EU national borders, meaning that free movement of components as well as finished goods is key to continued development for this sector.

"For Japanese firms continued investment in the UK needs such arrangements to be as smooth as possible."

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