Airbus warns no-deal Brexit could see it leave UK

Airbus has warned it could leave the UK if it exits the European Union single market and customs union without a transition deal.

The European planemaker said the warning was not part of "project fear", but was a "dawning reality".

Airbus employs 14,000 people at 25 sites in the UK - around half in Wales.

The UK government said it was confident of getting a good deal for all industries, but the Welsh government said it was "extremely worrying".

In its Brexit "risk assessment" published on Thursday, Airbus said if the UK left the EU next year without a deal - meaning it left both the single market and customs union immediately and without any agreed transition - it would "lead to severe disruption and interruption of UK production".

"This scenario would force Airbus to reconsider its investments in the UK, and its long-term footprint in the country," it added.

The company, which makes wings for the A320, A330/A340, A350 and A380 passenger planes in the UK, also said the current planned transition period, due to end in December 2020, was too short for it to make changes to its supply chain.

As a result, it would "refrain from extending" its UK supplier base. It said it currently had more than 4,000 suppliers in the UK.

The customs union brings together the EU's 28 members in a duty-free area, in which they pay the same rate of duty on non-EU goods

Prime Minister Theresa May has ruled out staying in the customs union. The UK is due to leave the EU on 29 March 2019.

The UK government is considering two other options: a customs partnership that would remove the need for new customs checks at the border; and a "highly streamlined" customs arrangement that would minimise customs checks rather than getting rid of them altogether.

Michel Barnier, the EU's Brexit negotiator, has said that both options are unrealistic.

A spokesperson for Prime Minister Theresa May said: "We are confident that we are going to get a good deal, one that ensures that trade is as free and frictionless as possible, including for the aerospace sector,"

A Welsh government spokesperson said: "We have repeatedly warned that the UK cannot take the huge economic risk of cutting ourselves adrift from the single market and customs union. Particularly in the case of manufacturing sectors, which in Wales are so important in providing high-paid, high-skilled jobs."

Analysis:

Simon Jack, business editor

It has been a source of exasperation for some cabinet members that although many companies have privately expressed concern - even alarm - at the progress of the Brexit negotiations, they have been reluctant to make their fears public, and have even dialled down the shrillness of their warnings when meeting the prime minister in person.

Airbus' decision to warn that future investment in their operations in the UK are under review, while not exactly welcome, is therefore considered by some in government as an honest and helpful declaration of what's at stake for UK workers and the wider economy.

Prominent Brexit supporter Sir Bernard Jenkin described Airbus' comments as the kind of "speculation" seen before, during and after the referendum from large companies. But Airbus' UK boss, Katherine Bennett, told the BBC, "this is not project fear, this is dawning reality".

Tom Williams, chief operating officer of Airbus Commercial Aircraft, said in "any scenario", Brexit had "severe negative consequences" for the UK aerospace industry and Airbus in particular.

Without a deal, he said Airbus believed the impact on its UK operations could be "significant".

"Put simply, a no-deal scenario directly threatens Airbus' future in the UK."

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Airbus's main civil aircraft business is based in a suburb of the French city of Toulouse. Apart from France and the UK, it has production and manufacturing facilities in Germany, Spain, China and the US.

Mr Williams told the BBC's Today programme that Airbus was currently working on developing the "next generation" of aircraft wings in the UK.

"We are seriously considering whether we should continue that development or whether we should find alternative solutions," he added.

Airbus makes wings for the A380 and other models in the UK

Conservative MP Stephen Crabb said the warning from Airbus should be a "wake-up call".

Mr Crabb tweeted: "The enormous Airbus factory in North Wales is one of the jewels in the crown of UK manufacturing. This is a wake-up call. A pragmatic, sensible Brexit that protects trade & jobs is vital."

And shadow Brexit secretary Sir Keir Starmer tweeted: "If proof was needed that the PM's Brexit red lines need to be abandoned (and fast), this is it."

Liberal Democrat leader Sir Vince Cable described the Airbus warning as "the 'Oh my God' moment where something real is happening".

He added: "Airbus are making absolutely clear that if there is a risk of a hard Brexit, they will have to stockpile parts. They can't take the risk.

"A hundred and ten thousand jobs depend on this company. About one-and-a-half billion in tax revenue that will not go into the NHS.

"We're now beginning to get serious about what Brexit means."

Main locations of Airbus' UK workforce