Big business focus turns to UK decision

MARSEILLE // Amid all the posturing, polemic and intemperate language generated by Britain’s referendum on whether to remain part of the European Union, the implications for Britain’s business relationships with member states remain clouded in uncertainty.

Few observers on the European mainland doubt that a vote on the June 23 in favour of Brexit would force a serious review of trading and investment.

Exactly what impact would be felt in specific business areas is as open to debate as the possible consequence for European politics, with some senior politicians in France and elsewhere openly concerned that a British vote to leave would encourage anti-EU elements in other countries.


Carlos Ghosn, the chairman and chief executive of the French and Japanese motor manufacturing majors Renault and Nissan, diplomatically says his group will adapt to whatever decision British makes.

In the UK and EU’s major trade partner, meanwhile, a Brexit could have “significant economic repercussions” for the United States, the Federal Reserve chair Janet Yellen warned on Monday.

Her comments came as the Japanese electronics conglomerate Hitachi said it would “rethink” investment plans if the UK quit the EU.

But, diplomacy aside, Mr Ghosn makes no secret of his belief that Britain should remain within the bloc. Nissan employs 8,000 people in the United Kingdom, with 32,000 more working indirectly through dealerships and the supply chain. There is no current threat to close its plant near Sunderland in north-east England, but some industry sources fear future investment decisions would inevitably change if Britain found itself outside the 28-nation bloc.

Mr Ghosn said in February that, while the decision was one for the British people, Nissan believed Britain’s best interests were served by remaining within the EU.

“We are a global business with a strong presence in Europe. We have a rich heritage in the UK with 30 years of manufacturing and engineering presence, and remain committed to building and engineering cars in the country,” he said. “Last year we produced more than 475,000 vehicles in the UK, 80 per cent of which are exported.

“Our preference as a business is, of course, that the UK stays within Europe – it makes the most sense for jobs, trade and costs. For us, a position of stability is more positive than a collection of unknowns … We obviously want the Nissan UK plant and engineering centre to remain as competitive as possible when compared with other global entities, and each future investment opportunity will be taken on a case by case basis, just as it is now.”

If those words carried at least the hint of troubled times ahead if Britain leaves the union, the dangers as seen by the German BMW and Daimler groups are even more pronounced. The chiefs of both companies were quoted as saying at the Geneva motor show in March that withdrawal would be “very regrettable”.

Harald Krueger, BMW’s chief executive, says the critical issue will be what type of post-Brexit trade agreement the UK is able to reach with the EU. His concerns are shared by the CEOs of PSA Peugeot Citroën and General Motors’ Opel, the makers of Vauxhall cars in Britain.

Meanwhile, Vincent de Rivaz, the chief executive of the British subsidiary of the French energy provider EDF, has assured British MPs that the controversial £18 billion (Dh96.4bn) project for a new nuclear power plant at Hinkley Point, in western England, would be unaffected by a vote to leave.

He told a parliamentary committee of energy and climate change in March the proposed Hinkley Point C had already passed numerous regulatory, political, commercial and operational hurdles.

But there are other obstacles. A final investment decision has yet to be made and the French government, which owns 85 per cent of EDF, is under pressure from unions worried the group is overstretching itself. A consultation process has begun and a final decision may not come until several weeks after the referendum.

When Britain goes to the polls, electors will be asked one simple question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”

But the wording is, perhaps, the only simple aspect of the campaign. The Brexit camp complains of “scaremongering” whenever fears are raised about future employment and investment prospects while those urging voters to keep Britain in Europe say membership is key to the nation’s prosperity.

The Britain Stronger in Europe lobby says almost half of what the UK sells to the world is sold to other member states, while an average of £24bn in investment flowing into Britain each year from Europe.

And it cites an estimate from the UK’s Confederation of British Industry that 3 million British jobs are linked to trade with the rest of the EU.

Equally stridently, the anti-EU Business for Britain group, affiliated to the Vote Leave campaign and claiming members from across the political spectrum, declares: “We believe that leaving the EU will create a better, fairer, more enterprising and prosperous United Kingdom.

“Free from unnecessary, restrictive and financially punitive regulation, able to make our own trade arrangements and to better invest our wasted EU ‘tax’, Britain will be the best place in the world to do business.”

Experts are also divided, although polls suggest more business leaders favour staying in the EU.

Gregor Irwin, a former mandarin at Britain’s foreign affairs ministry, says some of what is written about the economic consequences of Brexit is impartial, much of it partisan.

“Very little has been written on the consequences for the rest of the EU,” he wrote, introducing a report for the think tank Global Counsel, where he is the chief economist.

“The impact of Brexit through the trade and investment channels would be most severe in the UK,” he says in conclusion.

“Regulatory divergence would increase over time, affecting trade volumes and reducing the attractiveness of the UK for investment.

“This would impact on European businesses invested or trading in the UK and supply chains involving UK firms, but the magnitude depends on the specific Brexit model and is impossible to predict. The rest of the EU would also feel the impact through several other channels.”

However, Mr Irwin sees little prospect of London being dislodged as Europe’s leading international financial centre.

But perhaps the most authentic voice on the continent, in assessing the British temperament, is that of a respected French commentator, François Lenglet, quoting with approval the thoughts of the Victorian British statesman Lord Palmerston: “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

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