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Jaguar boss: Brexit threatens investment

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Jaguar Land Rover has warned that a “bad” Brexit deal would hit its profits and threaten £80bn worth of investment plans for the UK.

The UK’s biggest carmaker, owned by India’s Tata Motors, said its “heart and soul is in the UK”.

But it said that without frictionless trade its UK investment plans would be in “jeopardy”.

The warning came as Downing Street set out details of a possible post-Brexit customs arrangement.

Jaguar Land Rover chief executive Ralf Speth said: “A bad Brexit deal would cost Jaguar Land Rover more than £1.2bn profit each year.

“As a result, we would have to drastically adjust our spending profile; we have spent around £50bn in the UK in the past five years – with plans for a further £80bn more in the next five.

“This would be in jeopardy should we be faced with the wrong outcome.”

Mr Speth said the firm “urgently need[s] greater certainty to continue to invest heavily in the UK”.

JLR employs around 40,000 people across the UK.

Uncertainty over Brexit, as well as the future of diesel cars, has already led the carmaker to announce a series of changes to its UK business.

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At the beginning of the year, JLR said it would cut production at its plant in Halewood, Merseyside where it builds three of its Range Rover models.

It then said in April that it would not renew the contracts for 1,000 temporary workers at its operation in Solihull.

Last month, JLR said it would shift production of its Land Rover Discovery SUV to a new plant in Slovakia, potentially leading to some job losses in the UK.

However, the carmaker also said that it was investing in its Solihull site to allow it to build its new Range Rover models, some of which will be electric-powered, from 2020.

As well as Halewood and Solihull, JLR also has a manufacturing plant in Castle Bromwich, Birmingham.

Once the site where Spitfire fighter planes were build during World War Two, the plant now produces Jaguar cars.

Analysis:

Simon Jack, BBC business editor

JLR may be Indian-owned, but its brand and – as the company puts it – its heart and soul is in the UK.

It employs 40,000 people directly and 260,000 work in its supply chain. JLR’s warning follows those of Airbus, BMW and Nissan who have all said further investment in the UK is “under review” and could be cancelled if the country leaves the EU without a deal that ensures frictionless trade.

JLR insiders say £80bn worth of future investment in the UK over the next five years “could be lost”.

The intervention of such a major employer – which in many ways is rightly perceived as more British than the likes of BMW, Airbus and Nissan – will heap more pressure on the government ahead of a crunch meeting of government ministers on Friday. At this meeting, business hopes the government will finally settle on its own preferred version of the UK’s future economic relationship with its largest market.

Business Secretary Greg Clark said the government was “determined” to make sure JLR could “continue to prosper and invest in Britain”.

The Jaguar Land Rover warning follows similar statements from BMW and Airbus. However, Health Secretary Jeremy Hunt has called these warnings are “completely inappropriate”.

Meanwhile, the British Retail Consortium (BRC) has warned in a letter to Prime Minister Theresa May and EU chief negotiator Michel Barnier that failure to reach an agreement to ensure frictionless trade will result in customs delays for perishable goods.

The BRC says that a third of the food consumed in the UK is imported from the EU.

“Failure to reach a deal – the cliff-edge scenario – will mean new border controls and multiple ‘non-tariff barriers’, through regulatory checks, that will create delays, waste and failed deliveries,” it said.

“This could lead to dramatic consequences, with food rotting at ports, reducing choice and quality for UK consumers. It could also lead to higher prices as the cost of importing goods from the EU increases.

“And in the EU, £21bn of exports to the UK are at stake.”

Read more: http://www.bbc.co.uk/news/business-44719656

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