Tokyo

Japanese companies operating in Britain are launching full preparations for its withdrawal from the European Union, after the pro-Brexit Conservative Party’s election win.

Britain's parliament is likely to see smooth progress in procedures toward Brexit, Takeshi Minami, chief economist at the Norinchukin Research Institute said of the Tory victory that all but ensures that Britain will leave the EU at the end of January next year.

“We can head in a clear direction,” ANA Holdings Inc. President and Chief Executive Officer Shinya Katanozaka said in a press conference Friday.

But Japanese companies are still concerned that a failure for Britain to secure a trade deal with the EU during the roughly one-year transition period may result in a de facto no-deal Brexit.

“It is possible that Britain and the EU will not reach a deal during the transition period,” Minami said.

Nearly 70 percent of Japanese manufacturers operating in Britain had drawn up or were drawing up measures to cope with a no-deal Brexit, according to a survey by the Japan External Trade Organization published in late October.

Major Japanese manufacturers were steadily taking steps such as increasing their supply stocks and changing their distribution routes. “All we can do is respond well to future policies,” said Nissan Motor Co. President and CEO Makoto Uchida said.

Major Japanese financial institutions with European branches based in Britain have gained approval to operate in Germany or the Netherlands, so that they can continue business in the EU after Brexit.

“We had prepared with a no-deal Brexit in mind, so we are not affected in some special way,” said an official at Mitsubishi UFJ Financial Group Inc.

But some worry that the impact of a no-deal Brexit is unforeseeable. “Even if we conduct risk response in many areas, a no-deal Brexit will cause severe effects,” a Honda Motor Co. official said.

JETRO said that many small Japanese companies with business in Britain are taking a wait-and-see approach to their Brexit response until the situation becomes clearer.

“We want the British government to swiftly clarify its changes to systems and procedures resulting from the withdrawal, and to conclude a free trade agreement without delay,” Hiroaki Nakanishi, chairman of the Japan Business Federation, said in a statement Friday.

Jiji Press