No, Nissan’s move is not proof that Brexit will be a disaster
I should have known better.
In my last column, I tempted fate and wrote about the good economic news which the UK continued to experience, wondering out loud if Brexit could bring any bad news.
Then it happened with one word: “Nissan”. No sooner had it been announced that production of the Nissan X-Trail would not, after all, be coming to the company’s Sunderland plant than the wrath of all Remainers was visited upon Brexit believers.
Yet what this episode taught us was not how Brexit is putting British car manufacturing at risk, but how desperate those who still cling to membership of EU’s Single Market and customs union have become.
Further, it exemplified how much more notice is given to job losses – even potential job losses – than is given to new job gains.
First, here’s the truth about Nissan. Dig deep, and it is not hard to find those who really know their four-wheel-drives from their Formula Ones explaining that, while Brexit has undoubtedly contributed to business uncertainty, the reality is that the decline in diesel car sales in the UK is the major factor in Nissan’s decision.
It has probably not escaped readers’ notice that the existential shock to the diesel car market came from the EU’s badly designed climate change policy. Brexit cannot be blamed for that.
Moreover, production of the X-Trail is being repatriated to Japan. If it were all about Brexit, the shift would have been to inside the Single Market.
Then there’s the question of unintended consequences. The EU and Japan now have a free trade agreement, one that gives Japan access to the EU market without tariffs or an annual membership fee. This means that it is not necessarily advantageous to locate Japanese car manufacturing inside the EU rather than domestically.
Opening a new production line in Europe became less vital, especially with a model experiencing falling sales in a declining market.
From the way that some broadcasters went on about Nissan’s announcement, you would be forgiven for thinking that the whole Sunderland plant was closing and a long march from Jarrow to London was about to start.
The reality is that Brexit will of course cause uncertainty until a trade agreement is struck. But the withdrawal agreement that the Prime Minister continues to push for promises at least two more years of negotiations, prolonging the unknown, while those trying their utmost to derail and reverse Brexit are also fuelling the uncertainty.
Just imagine how much stronger the UK’s negotiating hand would be if these voices were to melt away and actually get behind a free trade agreement like Japan has been able to sign?
Second, there is a problem in Britain that has nothing to do with Brexit and everything to do with handling change. We are very poor at understanding how new jobs are created, and thus how the opportunities for new jobs can be ruined by high taxes, heavy regulation, and other uncompetitive overheads.
Broadcasters focus on jobs about to be lost rather than those being created. Did you hear the BBC cover last week’s investments from Tata Steel: £50m at Port Talbot? Or Bradbury Group: £8m at Scunthorpe? Blake Envelopes: £2.7m at Yeovil? Weston Group: £12m in Essex? Workwear Express: £3.5m in Durham? What about 2Agriculture: £20m in Fife?
No? Well I bet you heard all about the 7,000 jobs at risk (note: not lost, just at risk) at the Nissan Sunderland plant.
Indeed, the Treasury said that there would be 500,000 jobs lost in the months that followed the UK voting for Brexit. Yet since that date, there have been at least 750,000 more people employed. The Treasury prediction was wrong by at least 1.25m.
If there was a lie in the referendum, it was not on the side of a bus. No, the lie was that Brexit would create job losses and uncertainty, when it is those trying to stop us leaving the EU that are holding us back from achieving greater success.