The government and private companies are stepping up efforts to assess the potential impact of Britain leaving the European Union as London formally notified Brussels of its withdrawal from the bloc.
“There will be significant impact on businesses,” Economy, Trade and Industry Minister Hiroshige Seko said at a meeting Wednesday with executives of major companies. He suggested Tokyo will call for efforts by the British government to mitigate such an impact.
“We may need to reconsider our business in Europe, which has largely depended on Britain,” a participant from a large manufacturer said after the meeting,
Among their concerns are possible reduced access from Britain to the remaining 27 EU countries.
Many financial institutions have their European headquarters in London, and they worry about the possibility of not being able to use what is called the banking passport system unless Britain accepts certain rules, including those on free movement of workers. It could lead some banks to relocate their offices from Britain.
Sumitomo Mitsui Banking Corp., an arm of Sumitomo Mitsui Financial Group Inc., one of the largest banking groups in Japan, is considering setting up an office in a different city within the European Union.
Daiwa Securities Group Inc. is also looking to locate a new business base in Germany or Ireland, while an official of Nomura Securities Co. said, “Lots of uncertainties remain,” adding that the brokerage will take necessary measures to deal with Britain’s exit from the union.
Hitachi Ltd., a technology conglomerate operating railway and nuclear businesses in Britain, said the country will remain “the market we are focused on.”
Fujitsu Ltd., an information technology firm with a data center in Britain, fears Brexit could lead to regulations on data transmissions between Britain and the EU states.
“We don’t have any imminent concern. But we’ll closely watch future development,” a Fujitsu official said.
As Britain could lose access to the single EU market, Japanese automakers fret about possible tariffs on their products made in Britain.
More than 1,200 Japanese firms are operating in Britain, according to the Japan Business Federation (Nippon Keidanren), the country’s largest business lobby.
“I hope efforts will be made to prevent any disadvantage,” said Keidanren head Sadayuki Sakakibara.
The government will set up a task force to study how to support companies in Britain.
“We have grave concern because the issue directly affects Japanese firms,” Chief Cabinet Secretary Yoshihide Suga said at a news conference. All government offices will embark on supporting those companies to “minimize negative fallout,” the top government spokesman said.
Japan has been negotiating a free trade agreement with the European Union, with some officials noting that the two economies are close to a broad agreement.
Brexit, however, is causing uncertainty over how much Japan could benefit from the potential deal without Britain, government sources said.
There might be an option for Japan to separately seek a bilateral accord with Britain.
But one of the officials said the priority for now is negotiations with the EU.
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