Matthew Lynn

What happened to Brexit meaning the end of Nissan’s Sunderland plant?

What happened to Brexit meaning the end of Nissan's Sunderland plant?
Cars outside the Nissan plant, Sunderland (photo: Getty)
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It would have to close down its factories. Thousands of job would be lost. Suppliers would be abandoned, and the local economy would be shattered for a generation.

It was sometimes a little hard to work out why a few hardcore Remainers cared quite so much about Nissan. Its range of mid-market, family SUVs were not the kind of cars they would usually be seen dead in. But somehow the company became emblematic of the whole bitter debate about how the British economy would suffer if we left the European Union. If we weren’t in the Single Market, we were told again and again, the business was doomed.

So today’s news from the company is, to put it mildly, slightly surprising. It turns out that Nissan is indeed restructuring its European manufacturing operations as it struggles with declining sales. But its Barcelona plant is closing, not the one in Sunderland. In fact, production may be ramped up in Britain. There is even some speculation its partner Renault might shift some production here as well (although we can just imagine what the French government, with a 15 per cent stake, will have to say about that).

This certainly isn’t how we were told things would go. We were told again and again that car manufacturing would be destroyed by Brexit. Exports into Europe would face tariffs of up to 10 per cent. Just-in-time supply chains would collapse as it took three weeks to clear the paperwork on a couple of spark plugs. Skilled workers wouldn’t be available anymore. The Nissan plant could close if we voted Leave, argued its now-disgraced chief executive Carlos Ghosn in 2016. The Japanese government issued dire warnings about what its companies might have to do if the UK didn’t stay in the Single Market. Hardcore Remainers jumped on every warning with characteristic glee, reminding us all that Sunderland voted strongly to Leave. It was the perfect example of how ordinary people had been duped, and would suffer the consequences.

Even Leavers, if they were being honest, expected car manufacturing to suffer, even if other parts of the economy did better. But that isn’t how it is working out. Even though we are now definitely leaving, and the fraught state of the negotiations makes it seem more and more likely we will do so without any kind of trade deal, Nissan is expanding rather than contracting.

In fact, there isn’t any great mystery about it. The mistake some Remainers make is to vastly over-emphasise the significance of the Single Market. Sure, it is nice to have, but it is only one factor among many when deciding where to base factories. Productivity, local skills, demand, wage rates and transport costs are all equally important, and probably more so. Some extra paperwork is often not a big deal. And if there are tariffs, the exchange rate will make up for them. In truth, all the warnings of catastrophe were completely wrong, and the Sunderland car workers who voted to Leave got it right. You might hope that some of the leading Remainers would now admit that membership of the EU doesn’t make much difference to the economy one way or another, although admittedly that might be far too much to hope for.

Written byMatthew Lynn

Matthew Lynn is a financial columnist and author of ‘Bust: Greece, The Euro and The Sovereign Debt Crisis’ and ‘The Long Depression: The Slump of 2008 to 2031’

Topics in this articlePoliticsbrexitnissanremain