Brexit uncertainty likely to cause more Japanese firms to leave UK, ambassador warns

More Japanese firms could follow Honda and leave Britain in the coming months if the uncertainty caused by Brexit is not lifted soon, the country’s ambassador has said.

Koji Tsuruoka said the thousand or so Japanese businesses with operations in the UK needed to know what Britain’s trading relationship with the European Union (EU) would be.

If clarity on what Brexit would actually look like did not emerge soon, many of them would have to relocate elsewhere, he told Sky News.

“Most of these companies would like to expand their capacity. But they need to know about the UK-EU economic relationship,” he said. “These are all global companies and therefore they have other possibilities other than staying.

“They may relocate. Or they may combine or consolidate. But you can’t make those decisions until you know what’s going to happen next. This is very important.”

Honda announced last month it would close its Swindon factory in 2021, casting doubt on the future of thousands of jobs.

Although the car giant did not say Brexit had prompted its decision, many observers criticised the government’s handling of the post-referendum negotiations.

“The car industry in the UK over the last two decades has been the jewel in the crown for the manufacturing sector – and now it has been brought low by the chaotic Brexit uncertainty created by the rigid approach adopted by prime minister Theresa May,” Des Quinn, the Unite union’s nation officer for the automotive sector, said.

In a similar vein, Nissan said it would build its new X-Trail model in Japan rather than its longstanding Sunderland plant.

In a letter to workers, the carmaker’s European boss said “uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”.

Nissan’s future investment in the Sunderland factory has been a critical issue since it announced it would build new cars there four months after the referendum in 2016.

It then emerged the government had “offered reassurances” to the company, sparking concerns over secret deals.

Another factor which could be encouraging Japanese firms to wind down their operations in the UK is a newly-signed trade agreement with the EU, which would slash tariffs on car imports into the EU to zero.

By contrast, should Britain crash out of the bloc with a deal on 29 March, tariffs of 10 per cent will be immediately applied to all cars sent to the continent from British factories.