BMW, Amazon Give Brexit Britain a Boost as Banks Eye Own Exit

  • BMW says it will make electric version of Mini car in U.K.
  • Amazon announces it will boost size of its new London office

QuickTake: The Drive Towards Cleaner Cars

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BMW AG and Amazon.com Inc. gave a vote of confidence in the U.K. economy, in contrast to banks and other businesses increasingly preparing to shift some operations to the European Union as Brexit nears.

BMW said on Tuesday it will build an electric version of the iconic Mini compact car in Britain, hours after Amazon, the world’s largest online retailer, announced it will expand the size of its new London headquarters.

The decisions will be welcomed by Prime Minister Theresa May’s government after a series of banks and businesses activated plans to protect themselves against possible fallout from Britain’s leaving of the EU, its biggest market.

This month alone, Deutsche Bank AG said it will shift staff and money to Frankfurt, while EasyJet Plc revealed it will create a new airline based in Vienna to shield its routes within the EU. The Confederation of British Industry said on Monday that members are growing concerned about the risk that the U.K. will fail to secure a trade deal with the EU, resulting in tariffs and regulations being slapped on firms.

BMW chose the U.K. over plants in Germany and the Netherlands to manufacture the battery-powered Mini even though a failure by May to strike a long-term trade accord with the EU could inflict tariffs on imported components.

But the carmaker couldn’t delay a decision until March 2019, when Britain is set to leave the EU, and assigning the model to Mini’s main plant in Oxford, England, will likely ease tensions with U.K. officials keen for the marquee project.

The company has owned the British nameplate for about two decades and since 2000 has invested about 1.75 billion pounds ($2.3 billion) in its U.K. manufacturing operations. Including the Rolls-Royce marque, BMW employs about 18,000 people across the U.K. and exports 2.4 billion pounds of vehicles and parts from the country annually.

Read More: Road to Brexit: The Heartlands Where a Good Deal Matters Most

“BMW’s decision recognizes the strength of the excellent workforce, our record of innovation and the productive relationship between the automotive sector and the government,” Business Secretary Greg Clark said in a statement.

The company still has some wiggle room if Brexit does backfire, with a person familiar with the matter saying it was only committing to using the British plant until at least 2023.

That relatively short time frame for the production run -- four years, compared to the typical seven -- gives BMW the opportunity to shift the car elsewhere with the next revamp of the vehicle if necessary, the person said.

Meantime, Amazon said it will boost its presence in London to support the growth of its Prime Video service in Europe.

‘Fantastic Place’

The company will occupy the entire 15 floors of the newly constructed tower on the edge of the City of London, after initially having planned to only take 11. The additional space will house 450 new research and development recruits for its on-demand movie service.

“The U.K. is a fantastic place to find talent and we feel good about building a global R&D center here," Doug Gurr, head of Amazon’s U.K. business, said at the opening of the site. “We’re very confident we’ll be able to recruit everyone we need."

Amazon joins a list of large U.S. tech firms, including Snap Inc., Facebook Inc. and Google, in doubling down on London expansion plans despite Brexit.

London office vacancies climbed to 5.8 percent at the end of the first quarter from 3.9 percent a year earlier, the biggest increase since 2009, according to Deloitte LLP.

The U.K. is among Amazon’s largest international markets with more than 22,000 full-time staff based in the country. Amazon plans to have at least 24,000 by the end of the year, double the number it had at the end of 2015.

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