Navigation

Fear of no-deal Brexit rattles U.K.-based Japanese firms

Reuters

Britain’s Prime Minister Theresa May speaks to the media in Liverpool on Monday.

BloombergTOKYO (Bloomberg) — Japan has a lot riding on Brexit. That’s something Prime Minister Shinzo Abe is sure to drill home to Theresa May when he flies over to see her in person mere days before Parliament is poised to vote on her divorce plan.

Few countries are as worried about the prospect of a disorderly exit, given the degree of foreign investment in Britain, from carmakers Nissan Motor Co. to tech conglomerate SoftBank Group Corp. and fashion brand Uniqlo.

For them, Britain is their foothold in Europe and her deal may be the only thing guarding them from the chaos of a no-deal outcome. That is why Abe will probably speak out in favor of May’s proposal, according to a foreign ministry official.

A public show of support from Abe would show just how concerned Japan is that Britain is flirting with disaster and that its top companies could get caught in the crossfire. According to the official, who asked not to be identified, Abe will focus on the negative effects of Brexit and remind her that disruption to Japanese businesses must be kept to a minimum.

Abe and May will have a lunch together after he arrives Thursday, followed by a news conference and a business reception. This is his second visit to Britain since May took office and his seventh meeting with the prime minister. On a visit to London weeks ahead of the 2016 referendum, Abe offered vocal support for then-premier David Cameron’s campaign to remain in the EU.

Months later, Japan issued an open letter to Britain urging predictability in the process of Brexit negotiations on behalf of the roughly 1,000 Japanese companies, including car manufacturers that account for half of Britain’s production.

Less than three months before Britain leaves the European Union on March 31, May’s deal appears to have little chance of passing given the tough parliamentary arithmetic. For many companies, January was the cut-off after which contingency plans went into effect.

Instead Britain is talking up no-deal preparations and even those are not going as planned. For example, a practice run for a potential traffic jam caused by delays at the port of Dover turned into a farcical flop when not enough trucks showed to complete the drill.

None of this will be reassuring to investors, especially Japanese ones who are among the most exposed.

When Boris Johnson visited Japan as foreign secretary in 2017, he shook hands with a robot and promised a “fantastic, all-singing and all-dancing, U.K.-Japan free trade agreement.” Last year he resigned and is now one of the fiercest critics of her plan, calling it a “suicide vest” and even embracing “no deal” as something voters want.

This turn of events will have done little to put Japanese executives at ease.Speech

Click to play

0:00/-:--

+ -

Generating speech. Please wait...

Become a Premium Member to use this service.

Become a Premium Member to use this service.

Offline error: please try again.