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Nissan Deals Brexit Blow to Britain as May Works on Plan B (1)

An employee handles a side panel of an Infiniti Q30 automobile on the production line at the Nissan Motor Co. production plant in Sunderland, U.K., on Thursday, Dec. 3, 2015. Nissan rose 0.7 percent at the close Thursday in Tokyo trading. Photographer: Luke MacGregor/Bloomberg
By Bloomberg
04 Feb 2019 0

Theresa May is launching a new working group to look for a Plan B on Brexit, but the prime minister’s latest initiative comes too late to stop businesses such as Nissan Motor Co. from ditching key commitments to Britain.

The Japanese automaker cited ongoing doubts about the U.K.’s split from the European Union in its decision to scrap plans to build a new vehicle model in the country. May’s government had previously gone out on a limb to safeguard Nissan’s investment in the U.K., offering assurances in a private letter.

“We appreciate this will be disappointing for our U.K. team and partners,” Nissan Europe Chairman Gianluca de Ficchy said in a statement on Sunday. “The continued uncertainty around the U.K.’s future relationship with the EU is not helping companies like ours to plan for the future.”

Business Secretary Greg Clark described Nissan’s decision as “a blow to the sector and the region.” U.K. ministers are considering withdrawing a 60 million-pound ($78 million) support package for Nissan, the Times reported, citing an unnamed government official.

As time runs short to secure a Brexit deal, May’s expected to return to Brussels within days in an attempt to rewrite the most difficult chapter in the agreement she drafted with the EU last year — on the Irish border backstop plan.

Radical Demands

May is seeking a seemingly impossible compromise between the minimal changes that Brussels says it will consider, and the radical rewrite that euro-skeptics in her Conservative Party are demanding.

On Monday the premier will launch a new government working group intended to unite the feuding pro- and anti-Brexit factions within the party, according to May’s office. The body will explore “alternative arrangements” for avoiding a hard border with Ireland, after Parliament voted to reject the so-called backstop plan last week.

Home Secretary Sajid Javid said the technology already exists to replace the proposed backstop, which critics fear would tie the U.K. into the EU’s customs rules indefinitely.

‘Fact-Checking’

Speaking to the BBC on Sunday, Javid said border enforcement officials told him currently available technological systems mean there’s no need for checkpoints and other infrastructure on the U.K.’s land border with Ireland after Brexit.

But one of the EU’s most senior Brexit officials slapped down the idea in a tweet that she said was “fact-checking” British policy. “Can technology solve the Irish border problem?” Sabine Weyand, the EU’s deputy chief negotiator, wrote on Sunday. “Short answer: not in the next few years.”

There’s no sign that the standoff will end soon, whatever the cost for businesses. The government expects negotiations to go down to the wire, leaving the threat of a chaotic no-deal split that casts a shadow over companies right up to next month’s deadline.

“It’s inevitable that in these types of negotiations things do get decided close to the last minute — that’s when the maximum political pressure is,” Chief Secretary to the Treasury Liz Truss told BBC Radio 5 Live.

Truss insisted that the “threat of no deal” must be maintained to get the EU “on board,” and also because it’s already helping to bring Parliament closer to a consensus.

Her comments suggest the final eight weeks until March 29 — the U.K.’s scheduled exit day — will be fraught with tension. DM

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