Wednesday 2 November 2016

The roost beckons

Whilst the UK government continues to argue that nothing very much was promised to Nissan before they announced an increase in investment and production in Sunderland, questions are still being asked.  It’s understandable; previous strong rhetoric from car companies (and others) about the impact of being outside the single market, coupled with the government’s reluctance to release any details of what has been said to Nissan, mean that the whole situation simply doesn’t ‘feel’ right.  Put another way, it’s hard to believe that a simple statement of intent by the government that it will be seeking tariff-free access would be strong enough grounds to justify the apparent about-face, when all the indications are that the government will not get what it wants.
Perhaps it’s true that the cheque book remained firmly shut, and the government has not offered a penny to Nissan to mitigate the impact of tariffs.  If it’s not true, then they would be playing with fire; the truth will out eventually, and a not very orderly queue would start forming outside Number 10 as a whole host of other companies line up demanding the same terms.  (But there’s plenty of cash available, isn’t there?  I mean, it’s not as if anyone ever promised that the money being saved by not contributing to the EU would be earmarked for anything else, is it?)
But let’s take the government at its word, and assume that Nissan has been given nothing other than a glimpse of the negotiating strategy which is being kept so secret from the rest of us.  What happens if (or when) that strategy fails and Nissan get exactly what they’ve been promised, namely nothing?  Is this decision as long-term, or as concrete, as it’s been presented?
The truth is that none of us know, and we won’t find out unless and until details of the non-deal emerge and /or the final terms of the divorce become clear.  The government may well have succeeded in delaying this particular moment of truth.  But perhaps a temporary respite from the bad news is all the government, concerned more with short term headlines than with long term economics, really wanted at this stage.  Chickens, though, have a habit of returning at some point.

1 comment:

Cai Larsen said...

The chances that Nissan came to the decision they did on the simple understanding that the government would try to persuade the EU not to impose tariffs on cars produced by Nissan are pretty close to zero. Things don't work like that.