Sunderland's £162 Million Question: Brexit's Enduring Toll on UK Manufacturing
A decade after the UK's vote to leave the European Union, the economic fallout continues to crystallize, far removed from the referendum's initial rhetoric. The 2016 decision, a narrow 52% to 48% mandate, initiated a prolonged political unraveling that saw the country sever links to the single market and customs union on 1 January 2021. The resulting fractures across Britain's economy, body politic, and international relations are now evident, offering a stark contrast between aspiration and the high cost of reality.
Central to this unfolding narrative is the fate of Nissan's factory in north-east England, a site near Sunderland that became a totemic issue during the 23 June 2016 referendum. For 'leavers', it symbolized British manufacturing prowess, capable of global sales. For 'remainers', it represented an industry vulnerable to loss. Despite strong opposition from the British car industry and then-Nissan chief executive Carlos Ghosn's assertion that remaining made “the most sense for jobs, trade and costs,” the people of Sunderland voted overwhelmingly for Brexit, with 61% in favour.
The post-referendum chaos saw Theresa May's government grant Nissan £61m in state aid, a secret deal for over two years, to persuade the Japanese carmaker to invest in new models. This financial support continued, with another £101m provided in late 2022, and further talks for more support for current investment plans. These sums highlight the significant direct economic intervention required merely to retain manufacturing presence in the UK.
Yet, even this substantial state aid could not fully insulate the factory from the years of uncertainty. The looming prospect of a “no deal” Brexit, threatening 10% tariffs on exports overnight, cast a long shadow. While the UK ultimately averted this with the 2021 trade and cooperation agreement, new non-tariff barriers were introduced for car exports. The impact on production is clear: the Sunderland factory, which made 507,000 cars in 2016, produced just 273,000 last year. While other challenges like the coronavirus pandemic, the Ukraine war energy crisis, and Nissan’s internal leadership issues have masked some of this decline, Nissan privately warned that being excluded from the latest EU rules could create another “existential threat”.
This month, the factory secured a potential lifeline through a deal to produce cars for the Chinese manufacturer Chery. If confirmed, this could transform the factory's fortunes, though the focus remains on preserving jobs rather than adding thousands of new ones. This underscores a significant shift: from a thriving export-oriented manufacturing hub to one needing substantial public funds and strategic alliances to simply maintain its current footprint. The broader UK automotive industry's cost due to Brexit, according to the source, is beyond doubt, further exemplified by Chinese carmaker Xpeng's vice-chair, Brian Gu, explicitly looking to establish car manufacturing in Europe, signalling potential investment diversion away from the UK.
A decade on, the narrative of robust British manufacturing post-Brexit has collided with the costly reality of retention. The hundreds of millions in state aid and the halved production figures at a once-totemic factory offer a sobering insight into the economic implications of the political choice made in 2016. The future of UK automotive manufacturing appears to be less about unfettered global prowess and more about strategic preservation, navigating a landscape reshaped by new barriers and an altered competitive dynamic.