As the PM visits Tokyo, Japanese companies invested in the UK have voiced fears over single market access
Theresa May is under pressure to reassure Japanese companies over the likely impact of Britain’s exit from the European Union on their UK investments when she visits Tokyo this week.
The prime minister will arrive on Wednesday on a three-day trip that is expected to include a meeting with Emperor Akihito and free-trade talks with her Japanese counterpart, Shinzo Abe. Under EU rules, official free-trade negotiations cannot begin until after Britain has left the trading bloc. But the prospect of informal discussions will boost claims by May and other pro-Brexit politicians that exiting the EU will leave Britain better placed to trade freely with major economies such as Japan and China.
While details of her itinerary have yet to be made public, May will be accompanied by a delegation of business leaders that will “showcase the strength of British business, the shared confidence in the UK-Japan economic relationship as we leave the EU, and the potential for future growth, ” a Downing Street spokesman said. Her visit comes soon after the foreign secretary, Boris Johnson, promised Japanese officials that Britain was eager to reach an “all-singing, all-dancing” post-Brexit free-trade agreement with Tokyo.
However, trade aside, analysts warned that Japanese firms could reduce their investments in Britain if they feel Brexit would hamper their ability to operate across the EU.
“An increase in costs following Brexit could lead to a decline in Japanese investment in the UK and the relocation of production bases to other EU countries, ” said Katsunori Kitakura, lead strategist at Sumitomo Mitsui Trust International. “As such, the ongoing negotiations between the UK and the EU will be crucial for the future investment relationship between the UK and Japan.
“Japanese companies want to continue their investments in the UK after Brexit. However, the UK government will need to respond to their requests and take measures to maintain the same business environment that is currently in place as far as possible.”
Despite Downing Street’s assurances that Britain will remain open for business after Brexit, Japanese manufacturers and financial institutions have voiced concern about their future investments if it leaves the single market.
