Brexit Bulletin: Job Cuts Come to Car Country

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Jobs have been cut at Vauxhall Motors, production curbs are coming at Jaguar Land Rover, and union bosses fear this is just the prelude, Bloomberg’s Suzi Ring and Chris Jasper report.

“People shouldn’t underestimate the dangers that Brexit’s bringing,” said John Cooper, a union representative who has worked in the car industry in Ellesmere Port for 50 years. “Why would Nissan continue to invest in the northeast when it’s got a plant in Spain where it can build the same car without a 10 percent tariff?”

Brexit Bulletin: Job Cuts Come to Car Country

Tariffs and other hurdles to trade could be disastrous for the automotive industry since parts routinely move across borders several times during the manufacturing process. Take the BMW Mini, manufactured in Oxford. Before reaching the production line, each engine crankshaft is made in France, shipped to BMW’s U.K. engine plant in Hams Hall near Birmingham and then to Steyr, Austria for assembly.

This is what’s at stake as the government figures out what kind of trading relationship it wants with Europe after the divorce. A customs union – which the government has ruled out – would remove some of the friction in future trade. But regulations are another obstacle, and quotas could be too, depending on the terms of the final deal.

The Labour Party, funded by the unions that are trying to protect jobs in the industrial heartlands that voted overwhelmingly for Brexit, are also still trying to figure out what kind of deal it would seek if it got the chance. The Institute of Directors today proposes a hybrid customs arrangement that would help protect industry while giving the U.K. some freedom to negotiate other trade deals. 

The cost of assembling a car in Britain could increase by £2,372 ($3,337) under a scenario where a 10 percent tariff is imposed, according to estimates of London-based PA Consulting. Plant closures are most likely at Japanese-owned Honda Motor Co. and Toyota Motor Corp. since they export most of the cars they make in Britain, it said.

Foreign companies won’t stay “if there is no profitability of continuing operations in the U.K.,” Japan’s ambassador to the U.K., Koji Tsuruoka said earlier this month. “It’s as simple as that. These are high stakes that I think all of us need to keep in mind.”

But workers aren’t necessarily changing their minds about Brexit as a result. Outside Jaguar’s Halewood plant, one man said he’d voted to leave the EU because migrant workers crossing the bloc’s open borders had depressed U.K. wages.

“I’m happy to get out of Europe, just not with the way the government have gone about it,” he said.

Brexit Latest

When May Meets Merkel | May today meets a German leader weakened by an election result and months of coalition talks, culminating in a deal that gives her rivals key government portfolios. Merkel will want some straight answers from May on what she wants from the post-Brexit trade deal. May also attends the Munich Security Conference, where EU chief negotiator Michel Barnier speaks this morning. May speaks there on Saturday.

Plan for the City | The U.K. will seek a regime of mutual recognition for financial services with the EU after Brexit and is ready to present its proposal, the Financial Times reports. The preferred model is a “dynamic reciprocal mutual recognition model,” the paper says, and would be accompanied by a dispute resolution mechanism. It’s what the City has long lobbied for. Chancellor of the Exchequer Philip Hammond will endorse the idea in a speech as soon as next week, the FT says.

Hybrid Solution | Britain should aim for a partial customs union with the EU after Brexit, according to the Institute of Directors, to help maintain the competitiveness of some of the U.K.’s key industries and ease the flow of goods across the Irish border. But it would also “allow the U.K. to pursue an independent trade policy – albeit with some coordination on the areas covered by a shared external tariff.”

Losing to New York | Brexit will weaken the City of London and non-European cities will emerge as the winners, Bundesbank Executive Board member Joachim Wuermeling said on Thursday. He predicts the split will lead to higher costs for European companies by reducing the range of available financial services, weaken productivity and reduce market depth.

Port Prepares | The Port of Rotterdam is planning for the worst when it comes to Brexit, CEO Allard Castelein said on Thursday. “Containers, the agricultural sector, all of that is extremely vulnerable,” he said. “I am not saying that worst possible outcome will happen, but we need to be prepared.” Filling out import and export forms will be new for almost half of the companies using the port, and delays are expected.

Energy at Sea | SSE Plc called on the U.K. to continue partnering with the rest of Europe on infrastructure projects, including a giant wind farm in the North Sea, whatever the outcome of Brexit talks. Maintaining a good relationship with Europe is crucial for the development of the £15 billion ($21 billion) Dogger Bank projects, which will host 800 turbines that could generate electricity for Britain, Germany, Denmark, the Netherlands and Norway.

Giving Up on the U.K. | The number of doctors coming to the U.K. from the EU fell 9 percent in 2017 to an eight-year low, according to figures from the U.K.’s General Medical Council obtained by Bloomberg. There were 3,458 new doctors from EU countries who registered to work in 2017, down 26 percent from a peak of 4,644 in 2014.

On the Markets | The pound gained for the fifth day running, strengthening to $1.4132 in early trading on Friday. 

And Finally…

Remainers are planning a summer of campaigning with the aim of galvanizing opposition to the Brexit deal May brings back from Brussels in the autumn, Politico reports. As pro-remain activists get organized, the push will also include a summer rock concert in London.

Campaigners have a “determination I think to present a joined-up message against Brexit that’s been absent up until now,” said Matt Kelly, editor of the New European newspaper.

Brexit Bulletin: Job Cuts Come to Car Country

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To contact the author of this story: Emma Ross-Thomas in London at

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