Koji Tsuruoka laid bare growing nervousness about the impact of EU withdrawal on the Japanese car giants, banks and tech companies after meeting the Prime Minister in Downing Street.
“If there is no profitability of continuing operation in [the] UK, not Japanese only, no private company can continue operations,” Mr Tsuruoka said.
“So it is as simple as that. And this is all high stakes that I think all of us need to keep in mind.”
But the Prime Minister has vowed to pull the UK out of the EU’s economic structures and end free movement of citizens – although, in reality, those changes cannot take place until after a transitional period.
Speaking outside No 10, Mr Tsuruoka said Japanese companies were “enjoying their operations in the UK” and wished to stay – but that the decision rested on the outcome of the Brexit negotiations.
He added: “The question is whether the arrangements that will be reached between the two sides will allow the Japanese companies, who are willing and in some ways determined to continue to operate in the UK, to make that happen.
“This is contingent on a number of factors and there is not just one single factor that will be determining the decision.”
His country’s companies were “watching very closely” and badly needed “clarity and certainty, predictability”, Mr Tsuruoka said.
Brexit talks: Top issues facing UK on leaving EU
Brexit talks: Top issues facing UK on leaving EU
1/7 Customs union
A key point in the negotiations remains Britain's access to, or withdrawal from, the EU customs union. Since the referendum there has been hot debate over the meaning of Brexit: would it entail a full withdrawal from the existing agreement, known as hard Brexit, or the soft version in which we would remain part of a common customs area for most goods, as Turkey does? No 10 has so far insisted that “Brexit means Brexit” and that Britain will be leaving the customs union, but may be inclined to change its position once the potential risks to the UK’s economic outlook become clearer.
2/7 Northern Ireland-Irish border
Though progress was made last year, there has still been no solid agreement on whether there should be a hard border between Northern Ireland and the Republic of Ireland. To ensure borderless travel on the island, the countries must be in regulatory alignment and therefore adhere to the same rules as the customs union. In December, the Conservative Party’s coalition partners, the DUP, refused a draft agreement that would place the UK/EU border in the Irish Sea due to its potential to undermine the union. May has promised that would not be the case and has suggested that a “specific solution” would need to be found.
3/7 Transition period
Despite protests from a small number of Conservative MPs, the Government and the EU are largely in agreement that a transitional period is needed after Brexit. The talks, however, have reached an impasse. Though May has agreed that the UK will continue to contribute to the EU budget until 2021, the PM wants to be able to select which laws made during this time the UK will have to adhere to. Chief negotiator Michel Barnier (seen here with EU Minister David Davis) has said the UK must adopt all of the laws passed during the transition, without any input from British ministers or MEPs.
4/7 Rights of EU citizens living the UK
The Prime Minister has promised EU citizens already living in the UK the right to live and work here after Brexit, but the rights of those who arrive after Brexit day remains unclear. May insists that those who arrive during the transition period should not be allowed to stay, whereas the EU believe the cut-off point should be later.
5/7 Future trade agreement (with the EU)
Despite this being a key issue in negotiations, the Government has yet to lay out exactly what it wants from a trade deal with the EU. Infighting within the Cabinet has prevented a solid position from being reached, with some MPs content that "no deal is better than a bad deal" while others rally behind single market access. The EU has already confirmed that access to the single market would be impossible without the UK remaining in the customs union.
6/7 Future trade agreements (internationally)
The Government has already begun trying to woo foreign leaders into prospective trade agreements, with various high profile state visits to China, India and Canada for May, and the now infamous invitation to US President Donald Trump to visit London. However the UK cannot make trade agreements with another country while it is still a member of the EU, and the potential loss of trade with the world's major powers is a source of anxiety for the PM. The EU has said the UK cannot secure trade deals during the transition period.
7/7 Financial services
Banks in the UK will be hit hard regardless of the Brexit outcome. The EU has refused to give British banks passporting rights to trade within the EU, dashing hopes of a special City deal. However according to new reports Germany has suggested allowing trade on the condition that the UK continues paying into the EU budget even after the transition period.
However, the ambassador gave some backing to the beleaguered Prime Minister over claims the Cabinet is split over Brexit, saying: “I am not under that impression coming out of today’s meeting.
“I am under the impression that the UK Government is very firmly united behind the Prime Minister’s leadership in search and in pursuit of achieving the free, frictionless trade with the EU in a most ambitious manner.”
The comments came as sources said the second meeting this week of the “inner Cabinet” charged with agreeing a long-term Brexit plan broke up without achieving a breakthrough.
The 11-strong sub-committee spent just over two hours discussing future trade options – after failing to settle divisions over the Irish border and immigration on Wednesday.
They included the heads of car giants Nissan, Honda, Toyota and Mitsubishi and train manufacturer Hitachi, as well as those of tech companies, energy firms and banks.
No 10 insisted the talks had focused on how to make the UK “an even more attractive destination for Japanese and international investment, as well as the UK-Japan trade and investment relationship”.
A spokesman said: “The Prime Minister reaffirmed the Government’s commitment to securing a new deep and special partnership with the EU as the UK leaves the EU.”
The business leaders had “agreed on the importance of the time-limited implementation period in providing clarity and certainty for people and businesses”, he added.
“There was also agreement on the importance of moving quickly in the negotiations to secure a trading relationship with the EU that is as tariff-free and frictionless as possible following the implementation period.”Reuse content