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Japan concerned about business post-Brexit

Japan post-Brexit

Although a number of people were shocked at the UK's decisions to leave the EU, key sectors have bounced back after an initial period of panic.

The first few weeks after the Brexit vote saw economic activity drop to its lowest levels since the financial crisis, with concerns about a 'post-Brexit recession' being voiced by some experts.

However, things appear to be improving, with sectors like manufacturing stabilising and house prices seem to be mostly unaffected, though there is a weaker pound still to contend with.

On the eve of her first G20 visit, prime minister Theresa May was warned that if the UK don't undergo a 'soft exit' from the EU, then Japanese businesses and banks may be forced to withdraw.

In a letter entitled 'Japan's message to the UK and EU', the country's government stated that it was in the "interests of the world" to maintain an open Europe.

It also highlights the presence of many major Japanese firms - and the 440,000 jobs they create - who have their European offices focused in the UK. Nearly half of Japanese direct investment intended for the EU in 2015 was channelled into the UK, highlighting the way Japanese business has "contributed to the development of the European economy".

Focusing on issues such as access to workforces with the necessary skills and "harmonised regulations", the Japanese government stressed businesses should not suffer from any post-Brexit changes.

The UK and EU should work together to ensure that companies are supported through any "radical changes" to the current environment to reduce its impact and help Britain remain an ""attractive destination"" to do business, the document explains.

It said a "strong, united Europe" would be essential for the world economy and that uncertainty was a key concern.

In this vein, the letter warned about a scenario where Japan was unable to ascertain which way the Brexit negotiations were going, leaving it only able "grasp the full picture" at the last minute.

It reads: "It is imperative for the UK and the EU to regain the confidence of the world and ensure their unwavering competitiveness by increasing the predictability of the Brexit process, ensuring the outcome is free of unpleasant surprises and reducing the risks emanating from uncertainty."

Among the recommendations outlined in the letter, the Japanese government urged Britain to have an "extendable transitional period" to avoid any “unpleasant surprises” after negotiations finish and Brexit happens.