Airbus, BMW May Relocate UK Business Over Brexit Uncertainty

Airbus, BMW May Relocate UK Business Over Brexit Uncertainty

Two major European manufacturers have said they might have to pull out of the UK if London and Brussels fail to reach a deal on Brexit, or if the UK government is not able to provide some clarity over what to expect in that deal. First Airbus, the France-based airplane manufacturer, published a Brexit risk assessment last Thursday indicating that “the UK exiting the EU next year without a deal … would lead to severe disruption and interruption of UK production” and “force Airbus to reconsider its investments in the UK, and its long-term footprint in the country.”

The manufacturer employs 14,000 people directly in the UK and supports another 110,000 jobs through its 4,000 suppliers in that country. A withdrawal from the EU that removes the UK from the European customs union would disrupt Airbus’s cross-channel supply chain. The current planned Brexit transition, scheduled to last through December 2020, is “too short for Airbus to implement the required changes with its extensive supply chain,” the company said, and will require it to “carefully monitor any new investments in the UK and refrain from extending the UK suppliers/partners base.”

The German automaker BMW has also warned that it will have to think about moving its operations out of the UK if Downing Street does not get clear on its plan for Brexit soon, according to the BBC:

BMW UK boss Ian Robertson says clarity is needed by the end of the summer. BMW makes the Mini and Rolls Royce and employs about 8,000 people in the UK. … BMW has previously warned about the damage of Brexit uncertainty, and in May chief executive Harald Krueger said the company had to remain “flexible” about production facilities.

The Confederation of British Industry and other UK business groups are now warning that more companies are likely to follow suit, the Guardian reported on Friday. Unsure of where negotiations are going, the CBI said, companies are making plans under the worst-case-scenario assumption that the government will fail to strike a deal at all, leading to a “hard Brexit” in which the UK is abruptly severed from European regulatory and trade agreements when it leaves the EU next March:

Josh Hardie, the deputy director-general of the CBI, said: “We’ve increasingly seen companies talking about speaking out as the possibility of no deal has grown. March 2019 is not far away when you’re talking about the kind of adjustments companies like Airbus would have to make to even be slightly ready for a no-deal scenario. …

Allie Renison, the head of EU and trade policy at the Institute of Directors, said the statement from Airbus should serve as a wake-up call for Brexit negotiators on both sides of the table. “The UK and EU need to seriously up the ante in making progress not only towards a completed withdrawal agreed but also, crucially, a new future relationship,” she said.

Already, major banks like Goldman Sachs have begun preparing to shift their continental European business from London to cities like Frankfurt, citing uncertainty over whether they will still be able to conduct EU transactions from the UK after Brexit. While regulatory issues like customs and “passporting” are a major factor in these decisions, access to talent is another: UK financial firms, tech companies, and manufacturers have all expressed concern that post-Brexit immigration controls will cut off their access to European talent and make it more difficult for them to grow their businesses in the country.

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