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UK economy up 0.5% since Brexit vote, Nissan to build new Qashqai in Sunderland – as it happened

This article is more than 7 years old
 Updated 
Thu 27 Oct 2016 10.03 EDTFirst published on Thu 27 Oct 2016 02.42 EDT
A giant graffiti mural depicting the Union Jack in London.
A giant graffiti mural depicting the Union Jack in London. Photograph: Facundo Arrizabalaga/EPA
A giant graffiti mural depicting the Union Jack in London. Photograph: Facundo Arrizabalaga/EPA

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Closing summary: UK defies Brexit fears, for now...

A man walking his dog in Sunderland this week. Photograph: Scott Heppell/AFP/Getty Images

Time for a recap, after a very busy few hours.

Britain’s economy has defied fears that it would be dragged into an immediate recession following the EU referendum.

The first official healthcheck of growth in the last quarter showed that GDP rose by 0.5% between July and September.

That’s slower than the 0.7% recorded in April-June but faster than expected.

The services sector provided all the expansion, though, with growth of 0.8%. Manufacturing, construction and agriculture all shrank, showing that the UK economy remains unbalanced.

Photograph: ONS

Interestingly, film and production provided a major boost to growth. That suggests Britain is benefitting from the new wave of streaming services:

TV production helping boost post-Brexit vote UK GDP, you say? Gor bless Netflix & Amazon's largesse?: https://t.co/6NtehYJzRZ pic.twitter.com/nAu3amOHaI

— jasondeansy (@jasondeansy) October 27, 2016

Were it not for the output of the Film & TV production sector in Q3, GDP growth would’ve been 0.37% instead of 0.5%.
You’re welcome

— Ed Conway (@EdConwaySky) October 27, 2016

Chancellor Philip Hammond welcomed the news, saying it shows the UK economy is resilient as it begins Brexit negotiations.

But a series of economists have warned that growth will slow further in 2017. Higher inflation will eat into real wages too.

In another boost, Nissan has announced new investment plans for its Sunderland plant. The move guarantees 7,000 jobs, and eases concerns that production could be moved to France.

Prime minister Theresa May says it’s a vote of confidence in the UK.

But what has the government offered Nissan? Ministers are refusing to give details, but that hasn’t stopped the wider car industry seeking guarantees against damage from Brexit.

Labour have warned the government against carving up deals behind closed doors, and instead provide a comprehensive plan for Brexit.

And over in Brussels, Wallonia has dropped its opposition to Europe’s new trade deal with Canada.

That’s probably all for today, unless anything else major happens. I’ll be back tomorrow with more live coverage, including growth figures for France and the US.

Thanks for reading and commenting. GW

Greg Clarke, the UK business secretary, isn’t revealing what the government has promised to Nissan.

According to my colleague Peter Walker, Clarke just waffled through half a dozen questions on the World At One, despite being repeatedly asked if Nissan has been given a deal.

The best we got out of Clarke is this nugget:

There’s no question of financial compensation over tariffs, because we’ve said that what is necessary is that we are going to maintain the competitiveness of the sector.

But otherwise, it was like a rerun of Just A Minute (but without the humour).

Keep an eye on Politics Live for more reaction:

UK car industry wants Brexit assurances

Bang on cue.... Britain’s car industry is demanding assurance that it will be protected from any trade tariffs or migration curbs following the UK’s exit from the EU.

Mike Hawes, chief executive of the Society for Motor Manufacturers and Traders, says:

“Today’s announcement is good news for UK Automotive and jobs, confirming Britain as a leader in automotive production.

To secure this position, however, we need government to provide public assurance to investors that our advantages will be maintained – namely, a competitive business environment, the ability to recruit talent from abroad and the continuation of all the benefits of the single market as we leave the EU.”

Carlos Ghosn is clutching a piece of paper, promising help from the government if Britain’s exit from the EU hurts Nissan.

So says Reuters, which reports:

Britain has given Nissan a written commitment of extra support in the event that Brexit reduces the competitiveness of its Sunderland plant, in return for new production investments by the Japanese carmaker, a source with knowledge of the matter told Reuters.

In addition to unconditional investment aid, Britain pledged in a letter to offer further relief if the terms of Britain’s European Union exit ended up harming the plant’s performance, the source said.

That explains why Nisson has committed to making the Qashqai and the X-Trail in Sunderland. But surely other carmakers are going to want a similar deal, as Buzzfeed’s Alberto Nardelli tweets:

On one hand, good news for UK: Nissan trusts Gov assurances. On the other, assurances said to be "unconditional aid" https://t.co/TOde1wHvOV

— Alberto Nardelli (@AlbertoNardelli) October 27, 2016

.@ReutersUK If Reuters story true, big risk for UK gov't promising "Brexit relief" to Nissan is that every company is now going to want the same

— Alberto Nardelli (@AlbertoNardelli) October 27, 2016

Our political reporter Jessica Elgot has full details of Labour’s reaction to Nissan’s announcement:

John McDonnell, Labour’s shadow chancellor, criticised the deal done with Nissan as a “chaotic” strategy.

In a speech where he had criticised the government for appearing to prioritise financial services over manufacturing and small businesses, said there had been no public discussion of the deal hashed out for the car maker.

“We know nothing about it,” he said. “Are they literally going to decide factory by factory which one gets support? We have to have a comprehensive plan, and this is chaos at the moment.”

“We are trying to get a consensus and heal the divisions the referendum brought and we cannot do that with secret deals behind closed doors. It will divide our country once more.

The first deal looked like it would be protecting financial services, paid for by others. And now with Nissan, other manufacturers are saying what are we going to get? We have to have a comprehensive plan. What we need is more openness and transparency and accountability.”

Nissan Qashqai SUVs being built in Sunderland. Photograph: Owen Humphreys/PA

The Unite union are understandably delighted that the 7,000 Nissan jobs in Sunderland are safe, along with thousands more in the supply chain.

Unite assistant general secretary Tony Burke says it recognises the UK car industry’s world-leading status.

“Nissan’s decision is a massive vote of confidence in the skills and expertise of a world-class workforce and testament to their hard work which has made the Sunderland plant one of the most productive in the Nissan family.

Burke says the government must now secure tariff-free access to the single market, to help all UK car markets.

Breakthrough in EU-Canada trade deal deadlock

More news! The deadlock in Belgium that was preventing the EU signing a trade deal with Canada has been broken!

Prime Minister Charles Michel has declared that “an agreement” has been reached with the French-speaking communities in Wallonia who sensationally blocked the deal last week.

Cecilia Malmström, the Eu trade commissioner, says it’s an important breakthrough, that could mean the deal can now be signed.

Finally white smoke on #CETA. Belgian agreement reached. Hope a date can be set soon for the EU and Canada to sign the deal.

— Cecilia Malmström (@MalmstromEU) October 27, 2016

Unfortunately, Canadian prime minister Justin Trudeau has already cancelled his trip to Brussels to sign the deal. (he was due to land today).

And he needn’t pack his suitcase just yet. European Council chief Donald Tusk says he won’t be in touch until all the paperwork is definitely ready.

I am glad for good news from PM @CharlesMichel. Only once all procedures are finalised for EU signing CETA, will I contact PM @JustinTrudeau

— Donald Tusk (@eucopresident) October 27, 2016
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John McDonnell, Labour’s shadow chancellor, isn’t impressed that Nissan have apparently cut a deal to stay in Sunderland.

Sky’s Faisal Islam has the details:

Shad Chancellor re Nissan/ City: "now going go factory by factory offering support? This is chaos, cant go round country doing secret deals.

— Faisal Islam (@faisalislam) October 27, 2016

".. need a comprehensive strategy for single market access" says Shadow Chancellor

— Faisal Islam (@faisalislam) October 27, 2016

Mcdonnell on Nissan deal: "this is chaotic, there is no coherence, we dont know the terms"

— Faisal Islam (@faisalislam) October 27, 2016

Nissan’s surprise announcement came just as McDonnell was giving a speech about the economy, which is rather bad luck for Labour (unless the dark arts of political spin are in play...).

Our Politics Live blog has been tracking it though:

Theresa May hails Nissan's Qashqai decision

Prime minister Theresa May says Nissan has given Britain a “vote of confidence”, but she doesn’t reveal what promises she has given the carmaker.....

Theresa May hails the Nissan deal - question is what assurances have they given them to get it through pic.twitter.com/qlU55Uhgnn

— Emily Purser (@EmilyPurser) October 27, 2016
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Conservative MP Michael Fabricant is rather pleased by Nissan’s announcement:

We ARE going to make a success of Brexit!
Nissan not only going to build new Qashqai in Sunderland but X-trail too previously made in Spain

— Michael Fabricant (@Mike_Fabricant) October 27, 2016

Nissan: We're sticking with Sunderland following May's Brexit pledge

Nissan technicians preparing doors for the Qashqai car at the company’s plant in Sunderland. Photograph: Nigel Roddis/Reuters

It’s official! The next Qashqai will indeed be build in Sunderland, despite the uncertainty over Britain’s future.

Nissan is also pledging to build its next 4x4 X-Trail vehicle there too.

And the company also confirms that Theresa May’s government has given a ‘commitment’ that the plant’s competitiveness won’t be damaged by Brexit.

Here’s the official statement:

Nissan Motor Company Ltd. today announced, following its Executive Committee meeting, that it will produce the next Qashqai and will add production of the next X-Trail model at its Sunderland, U.K. Plant.

Nissan’s decision follows the U.K. government’s commitment to ensure that the Sunderland plant remains competitive. As a result, Nissan will increase its investment in Sunderland, securing and sustaining the jobs of more than 7,000 workers at the plant.

“I am pleased to announce that Nissan will continue to invest in Sunderland. Our employees there continue to make the plant a globally competitive powerhouse, producing high-quality, high-value products every day,” said Carlos Ghosn, Chairman and CEO of Nissan.

“The support and assurances of the U.K. government enabled us to decide that the next-generation Qashqai and X-Trail will be produced at Sunderland. I welcome British Prime Minister Theresa May’s commitment to the automotive industry in Britain and to the development of an overall industrial strategy.”

Nissan’s Sunderland plant opened in 1986 and has produced almost 9 million cars since. One in three British cars are produced in Sunderland, which is the UK’s largest car plant of all time. In addition, 80% of production from Sunderland is exported to over 130 international markets. More than 2 million Qashqai’s have been built in Sunderland in less than 10 years. In addition to the 7,000 direct employees at Sunderland, the plant supports a further 28,000 British automotive supply chain jobs. To date, Nissan has invested more than £3.7 billion in Sunderland.

Sunderland voted decisively to leave the EU back in June, by 61% to 39%.

So Brexit voters may feel vindicated by Nissan’s decision not to move Qashqai production abroad.

Paul Brand of ITV tweets:

When I reported from Sunderland during #EUref some Nissan workers were even voting Brexit, insisting their company was scaremongering 1/2

— Paul Brand (@PaulBrandITV) October 27, 2016

But big test won't be this next model of Qashqai. With Brexit still over 2 years away, it's whether Nissan will build future models too. 2/2

— Paul Brand (@PaulBrandITV) October 27, 2016

Downing Street will be very pleased by Nissan’s move, says City AM editor Christian May.

Sigh of relief in No 10 as Nissan announces it will manufacture its new Qashqai model in Brexit-backing Sunderland...

— Christian May (@ChristianJMay) October 27, 2016

Has Nissan managed to get the UK government to promise compensation, if the EU imposes tax barriers on car imports after Brexit?

CEO Carlos Ghosn was pretty clear that he wanted protection from any new tariffs, once Britain leaves the European Union.

After meeting Theresa May on October 14, Ghosn said:

If there are tax barriers being established on cars, you have to have a commitment for car-makers who export to Europe that there is some kind of compensation.

Sounds like Nissan has won guarantee of some form of compensation if it ends up paying tariffs on EU trade. https://t.co/Xt62WbWOe5

— Brian Groom (@GroomB) October 27, 2016

The BBC’s Simon Jack says that Nissan has received “support and assurances” from Theresa May’s government, encouraging it to build the new Qashqai in Sunderland.

Nissan conform Qashqai and X-Trail (new) will be built at Sunderland securing 7,000 jobs after "support and assurances" from UK government

— Simon Jack (@BBCSimonJack) October 27, 2016

The FT’s Peter Campbell predicts an official announcement soon:

BREAKING - Nissan will build both the Qashqai and the X-Trail in Sunderland, the company will announce later this morning. #brexit

— Peter Campbell (@Petercampbell1) October 27, 2016

Reuters: Nissan to build next Qashqai in Sunderland

Reuters are reporting that Nissan, the Japanese carmaker, has decided that it will build its next Qashqai SUV in Sunderland.

That would be a significant boost for the region, and one of the first major investment decisions since June.

The Nissan plant at Sunderland employs around 7,000 people, and is Britain’s biggest car factory.

Reuters: Source at Nissan says the car manufacturer will build its next Qashqai SUV model in Sunderland

— Sky News Newsdesk (@SkyNewsBreak) October 27, 2016

Last week Nissan’s chief executive Carlos Ghosn met prime minister Theresa May, and warned that his company could stop investing at Sunderland unless it was protected from any adverse impact from the Brexit vote.

We’ve called Nissan for comment.....

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Today’s growth report shows that the “Brexit bogeyman” hasn’t yet been as scary as initially feared, says Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management.

She writes:

Any lingering concerns over an immediate collapse in growth in 2016 have been officially put to bed, with output continuing to grow in the first major assessment of domestic activity post-referendum. Supportive monetary policy has played a part, while the softer pound has kept factory orders ticking along. These, along with robust consumption, will be key levers of growth.

But Curtin also predicts a slowdown next year:

The quarter on quarter slowdown in the growth rate suggests Brexit uncertainty is having some bite, and it’s likely the ambiguity around the UK’s exit from the EU will take some of the steam out of the long-term growth rate, with anaemic growth likely to become status quo while Article 50 negotiations rumble on.

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