IT had always seemed inevitable that the immediate run-up to the March 29 Brexit date would see a major blow in terms of the announcement of a big UK car plant closure.
The warnings from car manufacturers about their inability to plan for the future in the UK amid the Brexit chaos have been coming thick and fast for months. Their big problem is obvious for all to see – these car-makers need continued unfettered access for their UK plants to European markets and they still do not have any idea about the post-Brexit trading arrangements.
Car-makers with operations in the UK deserve great credit for their extreme patience, as the Conservative Government has pitched from one fiasco to another while determinedly pursuing Brexit and at the same time forecasting all scenarios will damage the economy.
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Honda has this week announced plans to close its factory in (Brexit-voting) Swindon in 2021 with the loss of around 3,500 jobs. The plant produces around 150,000 cars each year. The Japanese car-maker, while not mentioning Brexit specifically in what some might view as a diplomatically worded statement, said it would as a result of the “significant challenges of electrification…focus activity in regions where it expects to have high production volumes”.
A post-Brexit UK is obviously not figuring among these regions. And this should be no great surprise to anyone as the UK Government pursues its destructive path.
One worker, who has been at the Swindon plant for 24 years and voted Remain, understandably blamed the closure on Brexit, declaring: “Perfectly viable car plant operating for 30 years, no problem at all. As soon as Brexit comes along the plant needs investment.
“People like Justin Tomlinson, our MP, campaigned for this Brexit. He wanted Brexit – he gets to carry the can. If he’s not unseated by a massive majority at the next election, then this town gets what it deserves.”
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Swindon’s MP claimed Honda’s move had nothing to do with Brexit.
Labour MP Rachel Reeves, who chairs the Commons business committee, said the closure would be “devastating”.
Flagging the impact of the Brexit “threat” on business investment, she added: “The PM now needs to rule out no-deal immediately and keep us in the single market and customs union rather than risk further fatal damage to our car industry.”
Ms Reeves is right to emphasise the urgency of the situation, as Prime Minister Theresa May and her Government continue to faff around.
The importance of ensuring Brexit does not bring barriers to trade with the EU was highlighted diplomatically, but in no uncertain terms, by Koji Tsuruoka, Japan’s ambassador to the UK, about a year ago. Speaking outside 10 Downing Street after meeting Mrs May with a delegation of Japanese business leaders last February, he said: “If there is no profitability of continuing operations in the UK – not Japanese only – then no private company can continue operations. So it is as simple as that.”
It is indeed as simple as that. But this plain warning, like many others, has gone unheeded by the Tories.
So here we are a year later, and little more than one month before Brexit, and still domestic companies and overseas players with major investments in the UK do not know what their future trading arrangements with the European Union will be after March 29.
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Earlier this month, Japanese car giant Nissan confirmed it was abandoning plans to build a new model of its X-Trail sport-utility vehicle in Sunderland (another Brexit-supporting area).
Although Nissan talked about “business reasons”, it said: “The continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”
German giant Schaeffler, which makes bearings for the automotive industry, last November unveiled plans to close factories in Plymouth and at Llanelli in Wales in the next couple of years, in a move affecting hundreds of jobs. It is shifting production to Germany, China, South Korea and the US. Around 85 per cent of the goods produced by Schaeffler in the UK are exported, mainly to continental Europe. Albeit politely, Schaeffler made it plain that Brexit, while not the “single decisive factor” behind the closures, had been a significant influence.
It is increasingly difficult to know what more Mrs May and her ministers need to see to be persuaded of the urgency of the situation. And it is astonishing the UK Government is not pulling out all the stops to avoid further factory closures.
Business investment across the board has been hammered by Brexit uncertainty in the wake of the June 2016 referendum vote, even before we get to the actual exit from the EU.
The UK’s growth performance has been woeful, with the economy’s 1.4% expansion last year the weakest since 2012. And a survey published this week by IHS Markit revealed households’ views of their financial well-being have deteriorated at the sharpest pace for nearly a year this month amid Brexit uncertainty, while perceptions of job security have continued to worsen.
Gary Gillespie, the Scottish Government’s chief economist, warned this week that gross domestic product north of the Border could fall by up to 7% in the wake of a no-deal Brexit, and highlighted the danger of unemployment rising by 100,000. The Bank of England has highlighted the potential for a deeper UK recession than that triggered by the global financial crisis around a decade ago.
It is the fact there was no need for Brexit, and all the associated damage, which makes this whole sorry mess so spectacularly annoying, frustrating and demoralising. The Brexit fiasco is self-inflicted and can still be reversed, albeit the economic damage already done cannot be undone and the factory closures and cutbacks which have been announced will remain a reality.
The financial crisis was a global phenomenon. It was caused by the behaviour of the financial sector around the world and not, as the Tories might tell you, by the then Labour Government. It was a very different situation from the wilful drive by the Conservative Government to pursue Brexit at any cost, amid warnings of food and medicine shortages and in spite of factory closures and the obvious danger of far, far worse to come for people’s livelihoods.
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