Airbus, which makes wings for commercial aircraft in Britain, has said it might be forced to move future investments elsewhere in the event of a no-deal Brexit.
“If there is a no-deal Brexit, we at Airbus will have to make potentially very harmful decisions for the UK,” said chief executive officer Tom Enders, who has been among the most outspoken business leaders on the topic.
Airbus, based in Toulouse, France, directly employs 14,000 people in the UK and supports another 110,000, Enders said.
BMW chief executive officer Harald Krueger has said the carmaker would be forced to build in the Netherlands; Toyota warned of a temporary halt in production at its plant in Burnaston, England; and PSA Group, the maker of Peugeot, Citroen and DS vehicles, is considering closing one of its UK factories.
Of late, Japanese automaker Nissan cited ongoing doubts about the UK’s split from the European Union in its decision to scrap plans to build a new vehicle model in the country.
Britain would face a severe hollowing-out of its industrial base if such decisions were taken, yet time is running out for a decision on Brexit. If the UK can’t agree on a deal in the next 8 weeks, the country will leave the EU in a disorderly split that British authorities warn will risk a recession.
While the focus has been on trade with the EU, the problem is that what’s become known as a “no-deal Brexit” might be just as bad for companies doing business with other parts of the world.
The UK’s failure to guarantee free-trade agreements with countries like South Korea, Turkey and Norway has left exporters and importers concerned they too will be cut adrift. About 11% of Britain’s trade is currently covered by deals struck by the EU for its member states, ones the UK will have to replicate to maintain unencumbered exports and imports to and from more than 30 countries.
The Brexit imbroglio is also undermining London’s coveted status as the global financial hub.
The “City,” home to over 250 foreign banks and the Lloyd’s of London insurance market, has been facing a crisis ever since the vote on June 23, 2016.
An Ernst & Young report in June 2017 predicted a loss of 232,000 financial jobs in Britain as a result of Brexit.
Goldman Sachs chief executive officer David Solomon told the BBC in Davos last month that the bank would invest less in Britain if there is a difficult or hard Brexit.
For sure, the Brexit saga has got more dramatic and a lot more confusing. Britain now faces a March 29 exit deadline that may or may not be extended.
All Brexit options would involve costs, but a no-deal goodbye would be costlier, inflicting “substantial costs for the UK economy, and to a lesser extent the EU economies,” according to the International Monetary Fund.