Nissan - May Chickens Out

After a week of turmoil on the currency exchanges, with the anti-EU press losing their cool and lashing out at anyone of dissenting view, came The Hard Reality, as Nissan CEO Carlos Ghosn arrived in Downing Street to meet our not-at-all-unelected Prime Minister Theresa May. His chosen mode of transport was a Nissan Qashqai, built at the plant near Sunderland whose future may be in doubt. The heaviness of the hint was unmistakable.

The numbers are straightforward: Nissan’s plant is responsible for a third of UK car production. If Britain were to leave the Single Market and then fall back on World Trade Organisation (WTO) trading rules, those cars exported to the EU would attract a tariff of 10%. For a volume car manufacturer, that would make their products instantly uncompetitive. And the alternative would be brutally clear.

That alternative, for a company like Nissan which is part-owned by French automotive giant Renault, would be to up sticks and move its UK production to a location still in the EU. The Sunderland plant employs 7,000 directly, with another 21,000 in the supply chain. Tens of thousands more are dependent on Nissan remaining in the North East. This was a very high stakes poker game. And we now have a winner.

Who might that be? Well, it isn’t Theresa May. She blinked first, chickened out.

The first paragraph of the BBC report tells you all you need to know: “The boss of Japanese car giant Nissan says he is ‘confident’ the government will keep the UK a competitive place to do business after it leaves the EU”. That means one of two things - either companies like Nissan will be compensated for any tariffs imposed on leaving the Single Market, or that Britain will not leave the Single Market at all.

Other explanations are being floated, such as having manufacturers like Nissan and Airbus technically still inside the EU Customs Union, but if that had been acceptable to other member states, it would have been tried by other countries before now. The Government is effectively boxed in. Worse, Theresa May has let the cat out of the bag on her negotiating strategy - she’s prepared to subsidise Nissan to keep them here.

That would impose an extra cost on other taxpayers. And if Nissan gets such a guarantee, then you can be sure Honda, Toyota, Jaguar Land Rover, General Motors, BMW (Mini and Rolls Royce) and VW (Bentley) will want the same. So will Airbus and BAe. So will any and every significantly-sized manufacturer with an EU customer base.

Where will the billions in subsidy payments come from? What pot of money do we have which can be raided for years into the future? There isn’t one; had there been one, it would have been exploited before now. Theresa May is making this up as she goes along, and it shows. Carlos Ghosn has shown her just how much control she has taken.

We now know the price of choking off inward migration to appease the bigots and ranters. The problem is that they will not be the ones who suffer. But the rest of us will. Big time.