Japan, one of the world’s largest investors, is “bewildered” by Brexit, according to the former chief executive of the former government department UK Trade and Investment, the forerunner to the Department for International Trade.
Sir Andrew Cahn, who led the body for five years and was until recently a non-executive director of Japanese bank Nomura, told BBC Radio 4’s Today Programme the Japanese were “bewildered” by Brexit.
“The Japanese are really very disappointed about Brexit, probably of all the countries in the world, they are the ones which have reacted worst to Britain’s decision to leave the European Union,” Cahn said this morning.
In January Japan’s prime minister said the “whole world” wanted the UK to avoid a no-deal Brexit, which remains the default position if Britain exits the bloc without a ratified deal in place. Abe also pledged “total support” for the withdrawal agreement agreed by UK prime minister Theresa May with the rest of the EU in November.
However, May has tried to pass the deal through parliament three times, and each time it was massively rejected by politicians within her own party and opposition MPs.
Originally, the UK was meant to leave the EU on 29 March this year, but the constant rejections to May’s deal has led to back and forths with the EU for an extension to Article 50, in a bid to avoid a default no-deal Brexit. Currently, the extension is until 31 October this year.
Japan is the third largest economy in the world and is one of the UK’s biggest, and most vocal, investors. The UK imports around $13.7bn (£10.6bn) in goods a year from Japan. Japanese companies also employ 150,000 people in Britain, and trade between the two countries totalled £28bn in the past year, confirmed the government.
Back in 2016, during the referendum, Japan’s ministry of foreign affairs released a 15-page document detailing how Britain’s economy would be severely damaged if it left the EU’s single market — something that would happen in the event of a no-deal Brexit. It warned it would have a natural knock-on effect on investors with close trade ties with the UK.
This was made even more explicit when it pointed out in the note that Britain’s success in attracting Japanese investment was derived from its membership within the bloc.
Sir Andrew Cahn added on the BBC programme that foreign secretary Jeremy Hunt had a huge task on his hands, as Japanese firms use the UK as a gateway to the EU. This would be “significantly closed” if the UK left on World Trade Organization (WTO) rules.
Jeremy Hunt said today that Brexit “paralysis” would be “highly damaging” to the UK’s global standing.
“(Japan) has signed a deal with the EU and, in a no-deal situation, we hope that would roll over and apply for us, although no-deal, I think, is looking much less likely,” he said. “I think they are very keen to protect their trading relationship with the UK, but I think they are also wanting to talk to us about other things.”
However, a spokesperson for Uhuru, the Softbank-backed Internet of Things company, told Yahoo Finance UK: “The Brexit delay could create more uncertainty for the technology industry. However, that does not change the UK’s fundamental economic advantages, including an advanced and well-educated workforce, access to a big pool of capital and potential investors and strong historical business links with Europe, North America and the Commonwealth.
“As such, we plan to expand our operations in London and ultimately see Brexit as an opportunity rather than a hindrance. We think more technology companies from Japan and Asia will follow our lead over the coming years.”