A few days ago, I wrote about how big businesses were no longer just frustrated with Theresa May and her Brexit bumblings. Instead, they were turning hostile. “Soon the headlines will be not just about a few hundred jobs moving out of the City – but of firms scrapping their expansion plans, or factories shifting to Poland, or thousands of jobs going at a stroke of a pen.”
Today’s announcement from Airbus is just the first of those body blows to the British economy. The aeroplane-making giant has said in public what it has been telling ministers and officials in private for months: if May’s government crashes out of the EU without a deal, it will be forced to “reconsider its footprint in the country, its investments in the UK and its dependency on the UK”. Even an “orderly” Brexit, with all ducks in a carefully negotiated row, will cost the multinational billions in red tape and slower operations.
“Until we know and understand the new [post-Brexit] relationship,” concludes the company’s internal risk assessment , “Airbus should carefully monitor any new investments in the UK and should refrain from extending its UK suppliers/partners base.” Make no mistake: a multinational is now showing Brexit Britain and its shambles of a government the red card. And it will not be the last.
The significance of this is hard to overstate. Airbus directly employs 14,000 people in Britain; its supply chain supports a further 110,000 jobs here. In a country beset by low pay and low productivity, this sector is the opposite: highly skilled, highly paid, and with productivity growth of around 4% a year (compared with only 1% in the wider economy).
At Broughton in north Wales, they’ve been making planes since world war two. Under Airbus, that plant teems with 6,000 staff, in an area that 40 years ago was pretty much stripped of its steel industry. If it loses that giant factory, the local economy will be back on the floor for decades.
Some will doubtless point out the irony of the leave voters of north Wales now paying for their votes with their jobs. That is to ignore how many Airbus workers will be commuting into Broughton from around Liverpool. The potential ripples of this will spread far and wide, and they will last.
After Margaret Thatcher delivered the mortal blow to British industry in the 1980s, she devastated those communities – and helped sow the seeds of the Brexit vote of 2016. We are once again back at the stage where decisions made in smart offices by company executives threaten economic and social collapse in areas that can still remember their last great economic disaster – and once again the political consequences are likely to remain with us for a long time to come.
Of course, the government knows all this, because it produced an analysis of Brexit’s impact on aerospace as one of its 39 secret reports. These were the ones that were only made public after weeks of wrangling and published just days before Christmas.
I went back this morning and looked at what clues the report contained for the fallout for Britain’s aviation industry. Aircraft, it solemnly declares, have “nose, fuselage, wings … and tail”. I looked up mention of Airbus. Like Boeing, the report says, Airbus has “the capability to design and manufacture large, civil passenger aircraft”. In other words, the aeroplane-maker makes planes. And so it rambles on for 19 pages. To call it a Wikipedia rip-off would be too kind, since the online encyclopedia costs the taxpayer nothing. Yet it’s what you might expect from a government that has always treated Brexit as more a matter of internal party discipline and less a real-world event with an actual hard deadline.
This is not purely a Brexit story. It is also a reflection of the weakness of Britain’s economic model.
What the Airbus story reveals again is that our political classes – from Holyrood to Westminster to Cardiff Bay – have made themselves supplicants for foreign investment. The result is that among all the 28 members of the EU, the UK comes second only to Ireland in its reliance on foreign-direct investment. Just like Dublin and its sweetheart deals for the likes of Apple, we have bribed our way into that position.
Even while George Osborne was hacking back benefits for the working poor, he also brought down corporation tax to among the lowest in the world. The rationale was that this would make Britain more “competitive” and boost investment. Yet that policy was described this morning by his former adviser Lord Jim O’Neill as a comprehensive failure: “Investment spending has been very weak absolutely and relatively to many other countries. Despite this remarkable drop in ongoing corporation tax and rising profitability … it’s not done the job it’s supposed to do.”
Not only that, we have handed billions to companies in order to get them to set up base here. Look at the Corporate Welfare Watch database, set up by Kevin Farnsworth at the University of York, and you can see that the Welsh government handed Airbus nearly £15m in direct grants between 2004 and 2007.
Like Mexico, we are effectively a branch-plant economy for the rest of the world: we import components from other countries, then ships off parts to the continent or China or the US for them to be made into whole products. Trade secretary Liam Fox can jaw on about striking new trade deals, but he’ll be waiting a long time to find a buyer in Wellington or Canberra for the plane wings made in Broughton. And Jeremy Corbyn’s Labour can fret over not hurting the feelings of its leave-voting constituents, but it would be better off developing an industrial strategy that privileged local businesses and the everyday economy.
Brexit Britain is a precarious business model coupled with throwback fantasies about buccaneering our way around the Commonwealth. It makes us easy prey for the likes of Airbus, which although profitable in this country has been exploring its options in Korea and elsewhere for a long time. Why would a European plane-maker cut jobs in France or Germany when it needs EU support against Donald Trump and Boeing? Far easier to cut back in Britain, with its cabinet at war, its economy drifting away from the European mainland, and its jar of corporate sweeties already heavily raided. In lots of other industries, lots of other companies will soon be arriving at the same conclusion.
• Aditya Chakrabortty is a Guardian columnist
