I noted a report from a private consultant about Japanese companies in Britain. This is Rudlin Consulting and their report is HERE. There is what should be a worrying trend for the government because we are seeing a reduction in the number of Japanese companies in the UK but an increase elsewhere in Europe. This doesn't surprise me because there are occasional reports of Japanese firms opening new branches in Europe and other closing UK operations.
The reports says:
"The number of Japanese companies and their employees in the UK is starting to decline. Given that this is against the trend elsewhere in Europe, it is hard to avoid the conclusion that this is a reaction to Brexit.
"The decline is from a high base. The UK has the highest stock of Japanese foreign direct investment, the highest number of employees of Japanese companies and the most resident Japanese nationals in Europe. The decline in numbers of Japanese companies in the UK is mainly due to a reduction in Japanese companies in the manufacturing and financial sectors. There has also been a drop in the number employed in automotive manufacturing. On top of this, the main driver of the past few years behind the rising employee and company numbers - big-ticket M&As followed by expansion in employee numbers - has been less of a force more recently."
Figures from the Japanese Ministry of Foreign Affairs (MoFA) show a fall in the number of Japanese companies present here over the past five years, down 12% from 1,084 in 2014 to 951 in 2019 and a drop of 4% over 2018-9 alone. This is fewer 133 businesses.
And it doesn't include those who are still here but in a reduced state having shifted some functions into the EU.
The number of Japanese companies in Germany increased by 4% to 900 from 2018-9, by 1% to 518 in the Netherlands and by 2% in Italy to 270. The only other Western European country to record a fall was France with a 2% decrease from 437 to 420. In Europe, there was an increase in Japanese companies from 4,716 to 4,767 from 2018 to 2019 alone - a rise of 51.
MoFA data records a 5% rise overall in the number of Japanese companies in Europe from 2018 to 2019 – which breaks down into a 6% rise in Western Europe and a 1% rise in Eastern Europe.
So, the UK, previously the most popular destination for Japanese companies is now less popular than it was, certainly as a base for exporting to Europe. Of course, they won't all up sticks and move to the EU since the UK is still a good market, but given that many of them were exporters to Europe that aspect of their business is bound to be less attractive and will reduce over time.
With the closure of various Honda supply chain related companies in the UK in 2021, the number of Japanese companies looks set to fall further. And this exodus will not be confined to Japanese businesses, let's face it.
I mention this in relation to the economy and Sunak's budget last week, which seems to have gone down badly with its assumed 1% pay rise for NHS staff, amounting to about £3m-£4m a week for nurses apparently. A lot of people are asking about the £350 million a week 'saved' now we're out of the EU! Where is the other 99% going? Needless to say it does not exist.
Paul Johnson of the IFS tweeted:
It is a sad truth that current budget balance in Mr Sunak plans will require the highest sustained tax burden in UK history and yet more cuts to spending on "unprotected" departments. A problem created by a decade of paltry growth followed by the deepest recession in history
— Paul Johnson (@PJTheEconomist) March 4, 2021
Companies moving operations into the EU, not just Japanese but British and others too, will seriously impact the tax base in the UK in years to come. Plus, the FT were reporting in January:
".... about 1.3m foreign born workers [..] have left the UK during the pandemic, of which 700,000 were in London, according to analysis of government data by the Economic Statistics Centre of Excellence, a research hub set up by the Office for National Statistics. Brexit has been a consideration but the pandemic has driven many away."
