Nissan's warning on Brexit is the shape of things to come

Trade minister Liam Fox can pout and pontificate all he wants but business leaders are cutting investment and job losses will follow 

James Moore
Thursday 13 October 2016 10:07
Nissan's Sunderland plant may lose work in the wake of Brexit
Nissan's Sunderland plant may lose work in the wake of Brexit

The cheers of the Brexiteers in response to some moderately encouraging post-referendum economic figures are suddenly starting to sound hollow.

Nissan, which operates in Sunderland one of Europe’s biggest and best car plants, has issued a rather stark warning.

Chief executive Carlos Ghosn says the car maker will defer decisions on whether to build new generations of its existing models until it knows whether or not it will face tariffs for exporting to the EU.

New generations of existing models, remember. Sunderland can probably kiss any brand new models goodbye. They’ll almost certainly be made in countries that haven’t chosen to shoot themselves in their economic feet.

You can’t blame Mr Ghosn for standing pat. It is true that the Sunderland plant is one of the most efficient and profitable in Europe owned by either Nissan or Renault, with which the Japanese firm holds a manufacturing alliance.

However, many of the 500,000 models the plant churns out every year are destined for EU markets. If accessing those markets suddenly gets more expensive, as will happen if tariffs are applied to Britain's exports to the EU, that plant will look a lot less efficient and profitable.

We’ve heard similar messages from other companies that make cars in Britain, such as Jaguar Land Rover and Ford, which has scaled back investment in its engine works at Brigend in Wales.

Cynics will at this point raise the issue of what else Mr Ghosn has had to say, namely that he might be prepared to rethink his plans if the Government is prepared to compensate Nissan for any tariffs it might face.

It does seem like a shakedown is afoot. But Brexiteers like the odious Liam Fox, Secretary of State for International Trade, have created the conditions for Mr Ghosn to be able to do that so they have only themselves to blame.

Mr Fox still appears to think that he can have his cake and eat it with the EU. Trade barriers hurt everyone, he said in a widely reported speech that is being seen as the harbinger of a hard Brexit in which Britain would leave the European single market as well as the EU.

Well yes, Liam, they do. But they’ll hurt the UK a lot more than they will hurt the EU once the UK is out. See above. And there are no compelling reasons for the EU to grant UK a sweetheart deal. Au contraire. If it does, others may be banging on its doors asking for the same, with Switzerland and Norway at the head of the queue.

EU leaders will also fear the prospect of others following the UK down its mad road, perhaps the Eastern European members of the Visegrad Group who aren’t overly fond of Brussels themselves.

Of course, we don’t currently face any trade barriers with Europe, and we have deals in place with large parts of the world thanks to our membership of the EU, deals which will all be lost as a result of the lunatic decision to quit.

If Nissan and its peers follow through with their warnings – and there is no reason to think that they are bluffing – jobs will be lost. Well-paid manufacturing jobs in economically deprived areas where jobs are hard to find.

You wonder whether Mr Fox has given any thought to what he might replace them with? More calls centres? You wonder whether the people of Sunderland and the other places that voted in favour of Brexit will be so pleased with their decisions after the redundancy notices have been posted.

It won’t just be car workers getting them. Those who work in industries servicing their employers will also be affected as will those employed at businesses that rely on their incomes. Then there are all the jobs that won't be created as business investment in this country falls off a cliff.

Will Mr Fox, a wealthy man who will be all but immune from the economic fallout of Brexit, be welcomed if he visits the affected areas after this has happened? Probably not a question worth asking. I doubt he’ll have the guts.

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