Airbus Tells Britain It Wants Details of a Brexit Deal, or Else
Posted June 22, 2018 2:12 p.m. EDT
LONDON — Britain voted almost exactly two years ago to leave the European Union, and with months before it must agree on a withdrawal deal or crash out of the bloc, much remains undecided. Too much, for at least one company.
On Friday, the European aerospace giant Airbus, which makes commercial airliners like the A380 as well as military aircraft, delivered a stark warning to the British government: Give us more clarity, or we might leave the country.
The announcement, outlined in a published report and in remarks by a company executive, was unusually direct, offering a window into businesses' concerns as Britain runs out of time to make a deal with the European Union. Though few companies have spoken out publicly, trade groups have warned repeatedly that notice of any agreement was needed to help plan for future investments and adjust accordingly.
But with Britain set to leave the bloc by the end of March, few details have been ironed out. Banks based in Britain do not know what access they will have to continental European markets, pharmaceutical companies do not know how their drugs will be regulated, and airlines are unsure whether they will need to create separate entities headquartered abroad.
Airbus voiced many of those frustrations Friday. The company, which employs about 14,000 people in Britain, said that uncertainty about the country's future relationship with the European Union was forcing it to reconsider whether it should continue developing airplane wings in Britain. It warned that it had to make decisions this summer about supplies and investments that would affect it beyond the spring, when Britain is set to leave the bloc.
“Without clarity, then it's too dangerous for us to proceed,” Tom Williams, the Airbus chief operating officer, told the BBC. “We've got to be able to protect our employees, our customers and our shareholders, and we can't do that in the current situation.”
Williams' remarks came as Airbus published a “risk assessment” for Brexit's effects on its business. The company, which has a complex supply chain that covers several countries across Europe, said that Britain's leaving the European Union without a withdrawal agreement presented “urgent risks.”
“The U.K. exiting the EU next year without a deal,” the company said, “would lead to severe disruption and interruption of U.K. production.”
“This scenario,” it continued, “would force Airbus to reconsider its investments in the U.K. and its long-term footprint in the country.”
Airbus said it had more than 4,000 suppliers in Britain, and parts for its planes and other products crossed the English Channel multiple times. Britain's decision to leave the European Union, the company said, “will set new boundary conditions cutting through this highly integrated system.” If Britain withdraws without reaching a deal with Brussels, the company said it could lose as much as 1 billion euros (about $1.16 billion) a week in revenue.
Prime Minister Theresa May has negotiated the outline of a deal in which Britain would remain subject to European Union rules for a transitional period immediately after its planned date of withdrawal, at the end of March 2019.
However that is conditional on striking a broader agreement on several thorny issues, including a backstop plan to prevent the imposition of border controls between Northern Ireland, which is part of the United Kingdom, and Ireland, which will remain in the European Union. That complex problem still has to be resolved.
Nor is there agreement in London on Britain's plan for its longer-term economic relationship with the European Union, and how close future ties should be — an issue that has divided and paralyzed the government.
Even if May manages to break that deadlock and unite her Cabinet, she still faces the task of negotiating such a settlement with the European Union.
In the meantime, businesses are growing increasingly nervous.
“Even if we move into a standstill transition, that's going to last two years, and most business leaders think that's insufficient,” said Mujtaba Rahman, the managing director in Europe for the Eurasia group, referring to a transition arrangement in which Britain would remain subject to the same rules as if it were a full member of the European Union.
“I do think many other business are thinking the same thing, and many are likely to come out in public in the next few weeks,” he added. Some already have.
Juergen Maier, the chief executive in Britain for the German engineering company Siemens, told Reuters on Wednesday that his “biggest worry about Brexit is that I don't know what we are planning for.” Last week, the former head of Britain's biggest business lobby group warned that some companies were already shifting investment overseas because of the uncertainty.
Such dire statements are also reflected in broader surveys and statistics. Business investment last year grew at only half the average rate of the period from 2011 to 2015, according to Schroders, a financial company. Foreign direct investment plummeted at the end of 2017, it said.
Any move by Airbus could put a dent in the British economy. Airbus argues that its decisions will have a significant impact, claiming that it indirectly supports more than 110,000 jobs and contributed 7.8 billion pounds ($10.3 billion) to the British economy in 2015, according to an analysis done for the company by Oxford Economics, a research company.
Many businesses “are going to think very hard before choosing the U.K. if they don't know whether it will be part of the integrated market” of the European Union, said Thomas Sampson, a lecturer at the London School of Economics.
Airbus' decision to publicize its stance, Sampson said, suggested that it didn't feel the government was listening to its private appeals. “It's another signal,” he continued, “of how unhappy the business community is.”