Nissan is operating in Britain and as Mike Hawes, SMMT’s chief executive stated “the automotive sector” “has been hugely successful in boosting exports, creating jobs and generating economic growth in recent years” in Britain.

However, in the PEST analysis of Nissan, the political issues of Britain play a large role as Brexit: Britain’s exit from the European Union, correspondingly means that Nissan might have to pay taxes to export its goods from Britain to the EU. In addition, because of Brexit, some Europeans have started to ban products produced in the UK.

Nissan tries to tackle this political issue by asking the British government for a compensation for the losses related to the imposition of taxes and decrease of sales. In addition, Nissan tries to protect itself by not longer investing in the UK and gradually transferring their funds to other countries. For example, Nissan no longer considers to build the next Qashqau sport utility vehicle in UK.

The automotive industry generates more than 800,000 job positions in the UK and thus it might be detrimental for the UK if Nissan and other automotive companies gradually transfer their investments from the UK to other countries. If the government decides to pay Nissan the compensation it asks for, then there is a higher chance that Nissan continuous to operate in the UK. In my opinion, the amount the UK will have to pay for the compensation is trivial compared to the losses accompanied with Nissan’s withdrawal of investments.

However, if the UK government compensates Nissan, then  it gives the precedent for all the other firms operating in the UK to ask for compensation. Since this may not be done, the UK must negotiate with countries instead of firms. However, this might be an even more difficult as there are 27 countries in the EU, other than the UK, 50 additional countries with which the EU has preferential deals and another 161 countries, which are members of the World Trade Organization. Thus, negotiating with countries might take years or might even be impossible.

If this is the case, then the British economy is entirely on the hands of large firms like Nissan and their willingness to continue operating in Britain despite the tax imposed on goods exported in the EU and despite consumer’s unwillingness to buy British products.

All in all, Brexit has sparked a huge debate among economists on whether Britain should make trade negotiations and compensate firms that are vital to the British economy. In my opinion, Britain should do whatever it takes to persuade such firms to continue operating in Britain, but unfortunately it might be too late.