UK letter vowed to protect Nissan from Brexit fallout

UK’s business secretary’s assurances to Ghosn in 2016 were contingent on new X-Trail production at Sunderland site

Nissan announced at the weekend that it had decided to abandon plans to make its X-Trail SUV at its UK plant in Sunderland.

Nissan announced at the weekend that it had decided to abandon plans to make its X-Trail SUV at its UK plant in Sunderland.

 

The UK government promised Nissan that its operations would not be “adversely affected” by Britain’s departure from the EU, in a series of pledges that led to the Japanese car group’s 2016 decision to build new models at its Sunderland plant.

The assurances were contained in a letter from business secretary Greg Clark to then-Nissan chief executive Carlos Ghosn, a copy of which has been obtained by the Financial Times.

Nissan announced at the weekend that it had decided to abandon plans to make its X-Trail SUV at the Sunderland plant, urging the government to rule out a no-deal Brexit before inflicting more harm on the UK’s car manufacturing industry. The text of the letter highlights the gulf between a no-deal scenario, which could involve tariffs and delays at the British border, and previous pledges made by the government.

Support

The letter, which has never previously been disclosed and which the government previously declined to release under a series of Freedom of Information requests, also promised support of about £80 million (€91 million )towards Nissan’s investments at the site in return for the decision by Nissan to expand SUV production at Sunderland.

The letter said the government’s investment was “contingent too on a positive decision by the Nissan board to allocate production of the Qashqai and X-Trail models to the Sunderland plant”.

The government made no specific promise on the UK’s future trading relationship with the EU – such as remaining in the bloc’s customs union – but vowed to protect car manufacturers in the UK. They would be a “critical priority of our negotiations” with the EU, the letter said.

“The government fully recognises the significance of the EU markets to your presence in Sunderland,” the letter stated. “It will be a critical priority of our negotiations to support UK car manufacturers, and ensure their ability to export to and from the EU is not adversely affected by the UK’s future relationship with the EU.”

Mr Clark has been under pressure from Conservative Eurosceptics to publish the letter of assurances to Nissan, amid suspicions on the Tory right that he had indicated that Britain would seek to remain part of the EU customs union after Brexit.

Despite there being no assurances over the customs union, the letter did acknowledge Nissan’s anxieties over “uncertainties as the UK prepares to leave the EU, in particular your fear that potential future trade arrangements could affect the business case for your investments”.

Sensitive

The letter added that the government wanted to help Nissan “invest, and to grow Sunderland as a superplant within the alliance and a global leader for productivity and innovation”.

The letter stated: “In any circumstance, the government will ensure that the UK continues to be one of the most competitive locations for automotive and other advanced manufacturing within Europe and globally, including sites such as Sunderland”.

The letter also included promises to help Nissan increase its use of local suppliers, as well as continued government support for electric vehicles, such as the Leaf, which is made at the site.

Nissan said: “The letter, written in October 2016, shows Nissan and the UK government’s continued desire to support investment in the UK and maintain Sunderland as one of Nissan’s manufacturing hubs in Europe.

“The letter is no longer commercially sensitive as it contains nothing that hasn’t been disclosed publicly before, and the projects referenced in the letter have now changed.” – Copyright The Financial Times Limited 2019