On Monday Nissan announced it was moving production of a new X-Trail SUV to Japan, despite announcing in 2016 it would be built in Sunderland.
The move was partly due to a collapse in demand for diesel cars, but the company pointedly said the “continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”.
Nissan is the second biggest car producer in the UK, employing nearly 7000 people at its Sunderland plant which last year rolled out 440,000 cars (10 per cent down on the year before). The Nissan Qashqai is the country’s top-selling export car model.
In response to media leaks the government was forced to publish a letter it previously refused to release, which it sent to Nissan in 2016 promising “support of up to £80 million” ($140 million) as long as Nissan produced the Qashqai and X-Trail at Sunderland.
The government eventually committed to a package of grants totalling £61 million.
The promise was in response to Nissan’s concern that after Brexit “potential future trade arrangements could affect the business case for your investments”, the letter said.
At the time, the government denied it had offered Nissan any financial support. The 2016 decision to produce the X-Trail in Sunderland had been hailed by Brexiters as proof that the pre-referendum “Project Fear” about the consequences of Brexit had been wrong.
At the end of January the British car industry reported production had fallen by more than 9 per cent in 2018.
Investment in car production in the UK had fallen by almost half on 2017 (and 80 per cent in the past five years), partly, the sector’s chief body said, “as a result of businesses needing to wait for certainty over the future UK-EU relationship”.
Ralf Speth, head of Jaguar Land Rover, has said a no-deal Brexit would mean its factories could shudder to a halt and result in tens of thousands of job losses.
“We depend on free, frictionless, seamless logistics (in EU trade),” he said.
On Monday there was little sign of progress on Prime Minister Theresa May’s latest tactic, narrowly endorsed by the House of Commons last week, to attempt to renegotiate the Brexit divorce deal she agreed with Brussels last year.
A group of MPs met the European Commission’s secretary-general Martin Selmayr, and some said afterwards they believed Brussels was ready to consider a new legally binding agreement covering the contentious issue of the Northern Ireland “backstop”, a post-Brexit insurance policy to keep the border open by putting the entire UK in a customs union with the EU.
But Selmayr then tweeted that “on the EU side nobody is considering [changing the backstop]”, and added “the EU did well to start its no-deal preparations in December 2017”.
Commission spokeswoman Mina Andreeva later said the Commission was “always open to listen in full respect of national parliaments”.
She referred to a speech last week by president Jean-Claude Juncker, who said he would stay in “close contact” with May “and I will listen to her ideas” – but reiterated that the already-negotiated Withdrawal Agreement was “the best and only deal possible”.
German chancellor Angela Merkel appeared to offer a lifeline in a speech in Japan, where she referred to the need to “be creative and listen to each other” in finding ways to preserve Europe’s single market while meeting the need for no border controls in Ireland.
However she was talking about the yet-to-be-negotiated future trade relationship between the EU and UK, and ruled out changes to the divorce deal.
Meanwhile bad news Brexit stories continue to pile up.
The Guardian reported on the weekend that government officials were concerned about an end to the export of waste in a no-deal Brexit, predicting that “odours will obviously be an issue as the stockpiled waste putrefies”.
The Times on Monday revealed that companies were scaling back their plans for spending and hiring more ferociously then at any time since the 2008-9 financial crisis amid uncertainty over Brexit.
The same newspaper reported that critical government IT systems were dangerously exposed to a no-deal Brexit.
One example was the National Health Service’s blood and transplant system, which stores personal data on a computer network in Ireland that it may not be able to access without a Brexit withdrawal agreement.
On Sunday Minette Batters, president of the National Farmers’ Union, said a no-deal Brexit would be “absolutely savage for us”, destroying farmers’ livelihoods and putting food-buying customers at risk. She also pointed out that 90 per cent of animal vaccines were made in the EU.
Recently Sony and Panasonic announced they were relocating their European headquarters to the Netherlands
Sony said the move was due to concerns over Brexit-related disruption, though it added it had no short-term plans to move people or business functions. Panasonic said it was due to potential tax problems created by Brexit.
Toyota and Honda are halting some UK production temporarily at the end of March due to concerns about what Honda called “logistics and border issues”.
And a week and a half ago Airbus chief executive Tom Enders issued a video message warning “Please don’t listen to the Brexiteers’ madness, which asserts that because we have huge plants here we will not move and we will always be here. They are wrong.”
Airbus, one of the country’s biggest manufacturers, employs 14,000 people across 25 UK sites and indirectly supports many more suppliers.
“Of course it’s not possible to pick up and move our large UK factories to other parts of the world immediately,” Enders said. However, aerospace is a long-term business and we could be forced to redirect future investments in the event of a no-deal Brexit and, make no mistake, there are plenty of countries out there who would love to build the wings for Airbus aircraft.”
Nick Miller is Europe correspondent for The Sydney Morning Herald and The Age