EDINBURGH (Reuters) - Britain’s biggest carmaker Jaguar Land Rover has joined dissenters to a “hard Brexit”, saying that Britain leaving the EU without a trade deal would cost it 1.2 billion pounds ($1.59 billion) a year and curtail its future UK operations.
In a statement late on Wednesday, JLR’s [TAMOJL.UL] Chief Executive Ralf Speth said the car market needed “free and frictionless trade with the EU and unrestricted access to the single market” in order to ensure future success.
The car giant joined a growing list of companies, including Airbus (AIR.PA) and Siemens (SIEM.NS) last week, who have voiced concerns about potential disruption if Britain crashes out of the bloc next March without a trading agreement with the European Union — a so-called hard Brexit.
“We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees,” JLR’s Chief Executive Ralf Speth said in a statement late on Wednesday.
Asked about JLR’s worries, British business minister Greg Clark said the government was seeking a solution which worked for business. “I’m determined that investment will come to the UK,” Clark told reporters.
A meeting on Friday of British government ministers to try to agree a position for negotiations with the EU would take the concerns of business into consideration, he said. “I think it’s right that (our meeting) should be informed by the evidence of businesses large and small.”
Shares in Tata Motors (TAMO.NS), JLR’s Indian parent, plunged to their lowest in more than five years as investors turned jittery on the company. JLR is its biggest business and contributed nearly 77 percent of its total revenue in the year ended March 31, 2018.
“Prima facie, 1.2 billion pounds looks on the higher side and hence the reaction to the stock today,” said Basudeb Banerjee, an analyst with Ambit Capital.
Tata said in a statement here: "A Brexit which increases bureaucracy, reduces productivity and competitiveness of the UK Industry is in no-one's interest."
Due to uncertainty about what Britain actually wants from the EU after it leaves, the outcome of Friday’s cabinet meeting is seen as critical to progress in talks with the EU.
“A bad Brexit deal would cost Jaguar Land Rover more than 1.2 billion pounds in profit each year. As a result, we would have to drastically adjust our spending profile; we have spent around 50 billion pounds in the UK in the past five years - with plans for a further 80 billion pounds more in the next five,” Speth said.
“This would be in jeopardy should we be faced with the wrong outcome.”
Reporting by Elisabeth O'Leary, additional reporting by David Milliken in Newcastle and Vishal Sridhar in Bengaluru; editing by G Crosse, Emelia Sithole-Matarise and Jan Harvey