The Japanese government has warned that it would reconsider its investments in the UK if there is any significant fallout from the Brexit. Prime Minister Shinzo Abe declared that Japanese firms could move their European headquarters out of the UK, if the region fails to reach a free trade agreement with Europe. Japan has been one of the UK’s largest investors and a more than significant trading partner for the past few decades, but the Japanese have stated clearly that their allegiance is to the welfare of their own firms. According to the Office of National Statistics, about a thousand UK businesses are owned by Japanese investors. The Japanese ambassador to UK stated that there are 10,000 Japanese firms operating in UK, employing 140,000 locals.
What Japan is after is an agreement that allows their UK based firms to export to the rest of Europe without attracting additional costs. Nissan and Hitachi are two major Japanese manufacturers operating in UK with large exports to Europe. Nissan makes nearly half a million cars in UK annually out of the North East of England, most of which are exported, and hires over 6,000 people. Hitachi also makes trains out of the North East, exporting a large number to other parts of Europe.
There is reason for optimism however, as a large number of Japanese firms have operations in the UK unrelated to international trade. Another important factor is that most of these firms are independent of the government and are free to make their own policies. The fears shared by the Japanese Prime Minister are the same shared by British firms with dealings in Europe. It would be detrimental to Europe and UK if a mutually beneficial trade agreement isn’t reached.