Japan warns Brexit may drive banks, pharma investment to EU

Sun Sep 4, 2016 7:24am EDT
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TOKYO (Reuters) - Japan has warned Britain that its exit from the European Union could prompt Japanese financial institutions to relocate from London and listed a raft of concerns from Japanese companies about the transition away of the EU.

In a 15-page report published on the eve of a summit of the Group of 20 big economies in China, a Japanese government task force formed to respond to "Brexit" also warned of a possible outflow of drug research and development investment from Britain, though it said it expected the British government to handle its exit from the bloc smoothly.

Recent economic data suggests the economic impact of Britain's vote to leave the EU has not been as severe as some predicted, although British Prime Minister Theresa May said on Sunday its economy will suffer as a result of the decision.

The Japanese report, published on the Foreign Ministry's website on Friday, cites numerous concerns including that Japanese financial institutions may have to apply for corporate status in the EU if Brexit means they lose the 'single passport' - the right to operate across the bloc. It also raises worries over ease of access to unskilled labor, tariff protection, and London's status as a clearing center for euro transactions.

Formed in July shortly after Britain voted to leave the EU, the task force was headed by Deputy Chief Cabinet Secretary Koichi Hagiuda and comprises senior officials from the Prime Minister’s Office, the foreign, finance, trade and agriculture ministries and the Financial Services Agency.

"Since the inception of the task force, three meetings were held and we've compiled the message, taking into account concerns from the private sector," a Foreign Ministry official told Reuters on the sidelines of the G20 summit in Hangzhou, China.

"As a next step, we would like to relay this message to EU and UK leaders, taking advantage of a various diplomatic opportunities that are coming up including a G20 and UN high-level week," he said, declining to be identified.


A British flag and an EU flag are seen in front of a monitor displaying a graph of the Japanese yen's exchange rate against the U.S. dollar at a foreign exchange trading company in Tokyo, Japan, June 27, 2016.  REUTERS/Toru Hanai