Airbus says UK investments at risk over Brexit

An Airbus wing-production line in Broughton. The firm supports a massive supply chain in Britain with its wing-making operation.
An Airbus wing-production line in Broughton. The firm supports a massive supply chain in Britain with its wing-making operation.PHOTO: BLOOMBERG

LONDON • Airbus has threatened to pull its UK investments if Britain walks away from the European Union without a deal, upping the stakes for Prime Minister Theresa May as she fights to deliver a Brexit that will not wreck the country's economy.

In the starkest warning yet from any major company, the aerospace giant said late Thursday that a departure from the single market and customs union without a transition agreement would lead to "severe disruption and interruption of UK production".

Airbus, based in Toulouse, France, would be forced to "reconsider its investments in the UK, and its long-term footprint in the country".

"This is a dawning reality for Airbus," Mr Tom Williams, chief operating officer of Airbus Commercial Aircraft, said in an e-mailed statement.

"Put simply, a 'no deal' scenario directly threatens Airbus' future in the UK."

The remarks further hem in Mrs May, whose proposals aimed at keeping trade as easy as possible after the divorce have been repeatedly knocked back.

The EU is stepping up its rhetoric about the likelihood of a chaotic divorce and is warning companies that they need to prepare for the worst.

Anti-Brexit lawmakers, meanwhile, seized on the announcement as more evidence that the government's approach to the split is harming the economy.

"We have made significant progress towards agreeing a deep and special partnership with the EU to ensure trade remains as free and frictionless as possible, including in the aerospace sector, and we're confident of getting a good deal that is mutually beneficial," a government spokesman said.

For the first time in two years, it is the EU side rather than Britain that is making more noise about the chances of a messy walkout.

The warning from Airbus - a company that offers high-quality jobs across Britain and supports a massive supply chain with its wing-making operation - comes as Mrs May continues to fight with her own government about the kind of Brexit deal she will seek. Britain leaves the bloc in March next year.

Companies have been warning that they need clarity and urging the government to make decisions.

But this announcement is the strongest yet.

Mrs May heads to Brussels later this month for a summit that was meant to be a defining moment in the negotiations and the last gathering of leaders before the divorce deal is signed off in October.

Instead, a lack of progress and the chances of a breakdown will be the main point of discussion.

EU leaders will also remind Britain at the summit that if a Brexit deal is not struck, there will be no transition - the grace period that businesses are counting on for the first 21 months after the split.

Even if Mrs May does secure the planned transition, it is "too short" for Airbus to make "required changes with its extensive supply chain", the company said.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 23, 2018, with the headline 'Airbus says UK investments at risk over Brexit'. Print Edition | Subscribe