U.K. Assurances for Nissan Offer Glimpse of Post-Brexit Plan

  • Business secretary spells out commitments in BBC interview
  • Japanese automaker had warned it might pull out of Britain

U.K. Business Secretary Greg Clark offered the clearest insight yet into the government’s strategy for shielding manufacturers from Brexit, days after Nissan Motor Co. secured enough assurances to keep investing in the country. 

With other industries such as finance and pharmaceuticals likely to follow the car industry’s lead in demanding support, Clark said he had promised the Japanese automaker that the government would seek to maintain tariff-free access to the European Union once the U.K. has left the bloc.

“My determination was to go all-out to provide the confidence that a long-term investor needs that Britain will be the go-to place for manufacturing cars," Clark told the BBC’s "Andrew Marr Show" on Sunday. "What I said is that our objective would be to ensure that we have continued access to the markets in Europe and vice versa without tariffs and without bureaucratic impediments, and that is how we will approach those negotiations."

Clark’s Comments

Clark’s comments flesh out the details of Prime Minister Theresa May’s negotiating strategy as she plans to start formal talks with EU governments early next year. While having done enough to persuade Nissan to make a new investment at a plant in northeast England, the government may now come under to pressure to do the same for other key industries. 

The finance industry, for example, wants to maintain so-called passporting which allows banks to sell their services easily through the EU from London, while pharmaceutical companies want to be able to keep hiring foreign talent and safeguard research investment. 

"Theresa May is digging herself deeper into a hole by promising help to Nissan," Erik Nielsen, chief economist at UniCredit Bank AG told clients in a report on Sunday.

Just how successful she will be will depend on what other European governments are willing to grant the U.K. in the divorce. Most have said the U.K. cannot cherry-pick access to the single market and still deliver on its aim to crack down on immigration.

Still, when it comes to cars, the desire of manufacturers elsewhere in Europe -- especially Germany -- to keep selling vehicles to Britain tariff-free may give grounds for a deal. 

"There is a lot in common we can establish," said Clark. 

A column written by now-Brexit Secretary David Davis for the website ConservativeHome in July argued there was “a great deal” the government could do to help car producers if the EU did insist on imposing tariffs after Brexit. “Research support, investment tax breaks, lower vehicle taxes – there are a whole range of possibilities to protect the industry, and if need be, the consumer,” he wrote. “Such a package would naturally be designed to favour British consumers and British industry. Which of course is another reason that the EU will not force this outcome.”

Clark said his letter to Nissan also contained promises to support training and innovation; to keep on regenerating sites to bring suppliers back; to being at the leading edge of research and development; and to pursue a strategy to keep U.K. industry competitive. There’s no extra public money involved, he said.

“They were the assurances that gave confidence and allowed these jobs to be safeguarded and enhanced,” Clark said. “A lot of things apply to the industry generally.”

Nissan announced Thursday it would start making the X-Trail sport utility vehicle and the next-generation Qashqai at the Sunderland car plant, the U.K.’s largest, only a month after warning that possible post-Brexit tariffs could damage investment. The sudden shift drew questions about what guarantees the government might have promised to keep Nissan in Britain.

Key Employer

The Sunderland site employs more than 7,000 people and supports another 28,000 supplier jobs.

The business secretary wouldn’t be drawn on whether the government’s plans involve remaining in the EU’s customs union. He said that ministers are trying to “look right across the board” to find a deal for the entire range of U.K. industry.

The main opposition Labour Party’s Brexit spokesman, Keir Starmer, called on Clark to publish his letter to Nissan in full, saying it contains important details of the government’s Brexit strategy.

“The sooner we see that letter, the better,” Starmer told ITV’s “Peston on Sunday” program. “Nissan’s been told more about it than we have in Parliament, so the government’s got to come clean, I think, this week and put the terms before Parliament.”

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