10 most dire warnings from business on Brexit
Weeks after the Brexit vote in June 2016, Japan urged the United Kingdom to negotiate its EU divorce quickly and transparently to protect business.
Uncertainty would cause market volatility and reduce trade and investment, Japan warned. If the United Kingdom failed to secure a Brexit deal that protects trade, its companies could leave the country.
“What Japanese businesses in Europe most wish to avoid is the situation in which they are unable to discern clearly the way the Brexit negotiations are going, only grasping the whole picture at the last minute,” the government wrote in a 15-page memo.
Two and a half years later, and with just 10 days left on the Brexit countdown clock, that’s precisely the position all companies -— Japanese or otherwise — find themselves in. And the risk of a damaging disorderly Brexit has never looked more likely.
Frustration is now boiling over. Here are 10 of the most dire warnings from business leaders:
1. Siemens: A top Siemens executive said Monday that chaos over Brexit is wrecking the United Kingdom’s reputation as a place to do business and turning it into a “laughing stock.”
“Enough is enough. We are all running out of patience,” said Juergen Maier, the CEO of Siemens UK.
He told lawmakers that he was finding it hard to make the case for “finely balanced investment decisions” that affect UK jobs and competitiveness. Siemens employs 15,000 people and generates annual sales of roughly £5 billion ($6.6 billion) in Britain.
2. EasyJet: The discount carrier warned Monday that continued uncertainty over Brexit was reducing demand for flights in Europe. It said the pain could continue during the crucial summer season.
EasyJet said the confusion contributed to a massive £275 million ($359 million) loss for the six months ending March 31.
3. Citigroup: CEO Michael Corbat told Bloomberg in January that Citi would be forced to move European assets out of London if banks in Britain lost the ability to sell their services in Europe.
Financial services companies have announced plans to shift assets worth £1 trillion ($1.3 trillion) into the European Union, according to consultancy EY. Some 7,000 jobs are also expected to move.
4. Airbus: Tom Enders, the CEO of European planemaker Airbus, said in January that a disorderly split from the European Union would cause Airbus to redirect future investment away from Britain.
Airbus, which employs 14,000 people in Britain, said it could not guarantee its factories would survive.
“The United Kingdom’s aerospace sector now stands at the precipice,” warned Enders. “If there is a no-deal Brexit, we at Airbus will have to make potentially very harmful decisions for the United Kingdom.”
“Make no mistake, there are plenty of countries out there that would love to build the wings for Airbus aircraft,” he added.
5. McDonald’s: The fast food chain joined KFC, Pret a Manger and UK supermarkets to warn in January that crashing out of the European Union would result in “significant” disruptions to their supply chains.
The companies said they would not be able to maintain the “choice, quality and durability” of food if Britain leaves the bloc without an exit agreement in place that protects trade with Europe.
“While we have been working closely with our suppliers on contingency plans it is not possible to mitigate all the risks to our supply chains,” McDonald’s and the other companies said.
6. Sony: Japanese tech company Sony said in January that it would register its European business in Amsterdam, switching its legal base from London. It blamed uncertainty surrounding Brexit.
A spokesperson said it was “best to prepare in case no deal is reached.”
Sony’s move followed a similar decision by Japan’s Panasonic in October 2018 to move its European base from the United Kingdom to the Netherlands.
The company said at the time it was worried about potential restrictions on the flow of people and goods between Britain and other countries.
7. Nissan: In early February, Nissan reversed plans to build the X-Trail at its plant in the English city of Sunderland, choosing instead to manufacture the SUV in Japan.
It cited uncertainty over Brexit as one reason for the switch. The plant is the largest car factory in the United Kingdom, employing more than 7,000 people.
In March, Nissan announced it would stop building two luxury Infiniti models at the plant but denied the decision was connected to Brexit.
8. Ford: US carmaker Ford warned in January that a disorderly Brexit would cost it $800 million in 2019. That reflects the cost of new tariffs and expectations that the British pound would decline in value.
Ford Europe Chairman Steven Armstrong said Tuesday that the company would “have to take another long, hard look at the operations that we have in the United Kingdom” if there’s no deal on Brexit.
“We would have to take whatever steps it takes to protect the rest of the business,” he told Sky News.
Ford no longer makes cars in Britain but it operates two big engine factories and the country is its third biggest market worldwide.
9. BMW: Germany carmaker BMW, which makes the iconic Mini at a factory near Oxford, has said that a messy Brexit could prevent its factories from running.
Car manufacturers, which rely on complicated global supply chains, are worried that Brexit will lead to new trade barriers and delays at borders. The future of the industry is at stake.
“If we do not have a customs union, there are sectors of manufacturing society in the United Kingdom which risk becoming extinct,” Paul Drechsler, president of the Confederation of British Industry, said in June 2018.
The UK auto manufacturing sector employs 186,000 people, according to the Society of Motor Manufacturers and Traders.
10. Schaeffler: German engineering group Schaeffler, which supplies automakers as well as the aerospace industry, announced in November 2018 that it would close two plants in the United Kingdom.
It highlighted “the uncertainty over Brexit” as a key factor in its decision to shut a plant in Llanelli, Wales, and a second in Plymouth, in southwest England.