Toyota warned that it is considering “how to survive” in a UK outside the EU single market as businesses began to absorb the implications of Theresa May’s Brexit plan.
Job losses and relocations seem certain. HSBC confirmed plans to move 1,000 London roles to Paris, accounting for a fifth of the revenues from its global markets division.
Andrea Orcel, the president of UBS’ investment bank, said the Swiss bank “would have to move bankers” from London. “The question is how many,” he said to Bloomberg television, adding they could shift to Frankfurt or Spain.
“In our plans [ . . .] the only thing we can do is anticipate the worst, we cannot be optimistic. We anticipate a de minimis agreement between the UK and the EU. We anticipate there will not be a transitory period [ . . .] You are almost saying that the moment the UK invokes Article 50, we need to be in execution to move whatever we need to move to another jurisdiction,” he said.
Takeshi Uchiyamada, chairman of Toyota, also in Davos, told the Financial Times that the company’s UK plants needed to become more competitive if they were to survive the damage from Mrs May’s plans.
“We have seen the direction of the prime minister of the UK, [so] we are now going to consider, together with the suppliers, how our company can survive,” he said.
Mrs May laid out a vision of life outside the single market and customs union and further spooked businesses by warning that Britain would walk away from a trade deal with the EU altogether and revert to World Trade Organisation rules if it is not offered sufficiently compelling terms.
Mike Hawes, chief executive of UK car industry body SMMT said access to the single market is “critical” for the sector. “We must, at all costs, avoid a cliff-edge and reversion to WTO tariffs, which would threaten the viability of the industry,” he said.
Britain’s car industry is not only heavily reliant on exports to the EU, but also on Europe, and especially Germany, for many of the components that go into its vehicles.
Several carmakers including Nissan and Toyota have based their operations in the UK in order to export to the rest of the continent. Three quarters of the cars made by Toyota in Britain are exported to the EU.
A person close to Nissan, which obtained a guarantee from the government that its terms of trade would not be hurt by the Brexit negotiations, said the company’s position is unaffected by the content of Mrs May’s speech.
But Mr Uchiyamada had a stark message for the more than 3,000 workers in Toyota’s Burnaston and Deeside plants. Responding to Mrs May’s commitment to take Britain out of the EU single market and customs union, he said: “I won’t say that there is no impact to the company.”
Mr Uchiyamada made it clear that Toyota is speaking to the government in an effort to minimise disruption for the Japanese carmaker.
“We are considering and discussing with the government how to maintain the competitiveness and therefore through these kinds of communications we have with the government, our hope is that we will be able to draw a bright future for the continuing existence of the plant,” he said.
But he stressed that the local operations would have to play their part in improving productivity if the plants are to survive, when most of the models and engines they manufacture are exported to the EU.
Agreeing that Mrs May’s plans will damage the UK operations, he said: “The company will have to make efforts to ensure that it doesn’t turn out that way and of course what the company needs to do in any country is to understand the overall policy of that country and do what they have to do.”
Mr Uchiyamada stressed that no decisions had yet been taken and Toyota would wait to see how the rest of the EU responded to the UK government’s Brexit plans.
He also stressed that Toyota, which has operated in the UK since 1989, liked to make long-term investment decisions and recognised its responsibilities to local workforces and suppliers. He said that in recent years, while the company has increased production in the Czech Republic to meet rising demand, it had maintained its operations in the UK and France.
This article has been updated to reflect the fact that Mr Uchiyamada was not seeking reassurances from the British government similar to the ones that Nissan had received.
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