As Brexit ‘Cliff-Edge’ Fears Grow, France Courts Japanese Firms In Britain

There are growing fears that Britain could be headed for a so-called “cliff-edge” exit from the European Union, as big differences remain between Brussels and London over the shape of any future deal. 

The European Union’s chief negotiator, Michel Barnier, voiced frustration Friday that London has yet to detail what type of relationship it wants with the EU after Brexit.

“We had agreed with the British team on an agenda this week covering Ireland, the governance of the withdrawal agreement, and of course the transition,” Barnier told reporters in Brussels. “We had also planned an update by the United Kingdom on the future relationship. That update could not take place as planned this morning due to a scheduling issue on the British side.”

He also warned that both sides must agree on precise legal terms on the future border arrangements between Northern Ireland and the Republic of Ireland.

“Once again, ladies and gentlemen, it is important to tell the truth. A U.K. decision to leave the single market and to leave the customs union would make border checks unavoidable,” Barnier said.

That would mean the return of a physical border along the frontier, which many fear could reignite sectarian violence. Analyst Jonathan Portes of the U.K. in a Changing Europe program at Kings College London said the Ireland issue could determine the success of any overall Brexit deal.

“We have to work out how to translate the political fudge on the Northern Irish border that was agreed at the end of December into hard legal language,” he said. “And at the moment, no one really has any idea how to do that.” 

Britain says it wants frictionless trade with the EU after Brexit, but also the freedom to strike trade deals with other countries. But analyst Portes said the government is deeply divided over the shape of Britain’s future relationship with Europe, making negotiations difficult. A leaked government analysis suggests that economic growth in Britain will be reduced by up to 8 percent after it leaves the bloc.

Warning from Japan

Meanwhile, Tokyo’s ambassador to Britain warned that Japanese businesses might pull out of Britain if they faced higher costs after Brexit.

“If there is no profitability of continuing operations in the U.K., not Japanese only, no private company can continue operation. So, it’s as simple as that, and this is all high stakes that I think all of us need to keep in mind,” Ambassador Koji Tsuruoka told reporters Thursday, ahead of a meeting between British Prime Minister Theresa May and bosses of Japanese firms.

Japan has invested billions of dollars in Britain, lured by the promise of a tariff-free gateway to Europe. Carmakers Nissan, Honda and Toyota produce almost half of Britain’s cars, while pharmaceutical firms, tech companies and banks employ thousands of people.

Britain’s competitors, notably France, are eyeing that investment keenly. French Foreign Minister Jean-Yves Le Drian visited Tokyo last week and said any hopes that Britain might reverse course and stay in the EU were unfounded.

“It’s our choice, and our move, to tell the Japanese companies that, yes, the U.K. as part of the EU is over, but here is what we can offer you,” Le Drian told reporters.

‘Difficult pill’

Britain and Europe both want a transition period to ease the changeover for businesses. 

“Which is likely going to mean that the U.K. accepts that the EU makes all the rules, and we continue to pay, but we get no say. That’s going to be quite a difficult pill to swallow,” said Portes.

As the one-year Brexit countdown approaches, pressure is growing from Britain’s global and European partners for clarity over what future it wants after the European Union.

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