Photo Illustration: Tom Hall/Bloomberg

Brexit Bulletin: Is Toyota Starting the Car?

  • Hammond sets out vision of a transition that keeps the status quo
  • Carmakers express concern about ongoing uncertainty

Sign up to receive the Brexit Bulletin in your inbox, and follow @Brexit on Twitter.

Just as Theresa May is poised to announce what she thinks companies want, they say she’s only making Brexit worse.

The prime minister is set to ask the European Union to let Britain keep access to its single market and customs union for a period after Brexit to help companies adjust, but carmakers are warning the uncertainty over a transition phase is already chilling investment in the U.K. and could force production elsewhere.

With May planning a speech this month to outline her current thinking on the split, Chancellor Philip Hammond on Tuesday gave an insight into its contents by saying the government wants a “status quo” transition.

Many business leaders share Hammond’s desire for a long, steady implementation period. Unfortunately, others say the continuing shifts in Britain’s approach make it impossible to plan for the longer term and Toyota is citing a “strong need” for clarity.

“We will not postpone a new product for three more years just because the negotiation is going to take three more years,” Executive Vice President Didier Leroy told Reuters in Frankfurt on Tuesday. “It’s clear that if we have to wait two to three more years to have clarity on this topic, we will have a big question-mark about our future investment in the country.”

While Toyota later said it’s still committed to the U.K., others at the event also expressed concern. PSA Group Chief Executive Officer Carlos Tavares said a lack of guidance on Brexit is already preventing investment.

Hammond’s transition plan will grate with the most ardent supporters of Brexit as well as EU officials who don’t want to reward Britain’s decision to leave and are urging it to focus on settling the terms of divorce before discussing the future.

The chancellor spoke as Brexit negotiators postponed next week’s scheduled round of talks in Brussels until Sept. 25. The aim is to give both sides more time to ensure they make progress when they do convene, a U.K. government spokesman said.

Other officials said it was to give May space for her speech. The likeliest time spot is looking to be after her return from attending the United Nations in New York, around Sept. 22.

May’s damaged standing did receive a boost late on Tuesday. She won a vote in the House of Commons to guarantee her Tory government has the most seats on key law-making committees, which scrutinize bills, despite not having won a majority in the election. She also bought herself some time with a move to ease a cap on public pay raises, starting with the police.

Toyota Executive Vice President Didier Leroy said there was a “strong need” for clarity on the shape of Brexit.
Photographer: Simon Dawson/Bloomberg

Brexit Latest

Labour Stays Quiet | Opposition Labour Party leader Jeremy Corbyn barely mentioned Brexit as he received a hero’s welcome from trade unions on Tuesday. Rather than clarify his position on the split, he couched his comments in the language of class division as he sought to gloss over differences within his party. Labour did propose a series of amendments to May’s repeal bill.

Mitsubishi UFJ | Japan’s biggest bank has chosen Amsterdam as a base for its investment-banking business in the EU after the U.K. leaves, people with knowledge of the matter said.

How Sweet is Brexit? | Divisions within Britain’s sugar industry over Brexit are set to be exacerbated when EU quotas that curb sugar production and exports end in October. That’s a boon for British Sugar, but a pain for Tate & Lyle Sugars.

Foreign Labor | British workers haven’t been losing out to foreign workers and are unlikely to see job prospects dramatically improve because of Brexit immigration cuts, according to a survey of U.K. companies. While almost half of firms faced skill or labor shortages in the past 12 months, less than 10 percent said they targeted overseas workers to fill the gap, the British Chamber of Commerce said.

Carbon Plan | The European Commission will propose marking carbon allowances issued by the U.K. as of January 2018 as part of Brexit-related rules to make the world’s biggest emissions market resistant to potential supply turmoil.

Security for Trade | Britain is continuing to link security to a future trade deal. Defence Secretary Michael Fallon said the future partnership has to be both economic and one of security cooperation, in comments that are likely to irk European negotiating partners.

Bridging Brexit | Former Brexit Minister George Bridges outlined a plan to ensure Brexit is as smooth as possible.

An American in London | The new U.S. ambassador to London, Woody Johnson, cheered Brexit supporters with his maiden speech. He called the U.K. “our most enduring ally” and said it “is always at the head of the line.” “The United States is committed to standing with the U.K. through Brexit,” he said. 

On the Markets | The pound rose to a one-year high against the dollar after U.K. inflation accelerated more than forecast, prompting investors to bring forward expectations for an interest-rate increase by the Bank of England next year. Investors said the pound could still find support from the hawkish tone among policy makers, even as economists predict no imminent rate hike.

And Finally…

European Union policy makers may not be fans of U.S. President Donald Trump, but they are drawing inspiration from his use of Twitter.

As Bloomberg’s Ian Wishart and Robert Hutton report, normally faceless EU bureaucrats, rarely quoted in the media, have started tweeting about Brexit. By contrast, U.K. negotiators are tending to keep clear of social media.

British politicians “are desperate at the moment to have as much ambiguity as possible about what they are doing,” said Colin Talbot, professor of politics at Manchester University. “It’s very difficult to be studiously ambiguous in 140 characters—long-winded memos that say nothing are a lot less dangerous than tweets.”

For more on Brexit follow Bloomberg on Twitter, Facebook and Instagram

    Before it's here, it's on the Bloomberg Terminal.