Japan rains on Boris Johnson parade with stark warning on no-deal Brexit

Japan sounded an alarm bell today over a No Deal which bosses in Britain fear could spark economic carnage and destroy hundreds of small firms.

Taro Kono, Japan’s foreign minister, said that in meetings with the two contenders to be prime minister, Tokyo would be arguing “please no No Deal”. 

But Boris Johnson has nailed his colours to Britain leaving the EU on October 31, with or without a deal, and rival Jeremy Hunt has said that he is also willing to crash the UK out of the European bloc if no agreement seems possible.

Former foreign secretary Mr Johnson added today that, if he gains the keys to No 10, all his Cabinet ministers would have to be “reconciled” to No Deal.

However, one of Britain’s leading business chiefs warned that hundreds of small companies risk being forced to the wall if the country hurtles out of the EU in just a few months’ time.

Paul Drechsler, chairman of business group London First and former president of the CBI, told The Standard: “Definitely, hundreds of small businesses could go under rapidly if there is a No-Deal Brexit.”

Large and medium-sized firms have spent billions preparing for a hard Brexit which could see immediate tariffs imposed on goods, chaos at borders and damaging transport delays.

However Mr Drechsler, speaking at a meeting of the All-Party Parliamentary Group for London last night at Westminster, emphasised that many small firms, which the Conservatives have prided themselves on championing, are not prepared for such turmoil.

He added: “The Tories used to be the party of business and now the jury is out.”

Japan’s ministers are punctilious in respecting diplomatic protocol but such is the worry in Toyko about a No Deal that Mr Kono spoke out strongly about its dangers.

“There are over 1,000 Japanese companies who operate in the UK so we are very concerned with this No Deal. That would have a very negative impact on their operation,” he told the BBC’s Today programme.

Firms did not know what would happen “legally or physically” to their goods in such a scenario, he added, and some of them had already started to move operations to the Continent.

Japanese car giants were particularly concerned about the “just-in-time” flow of parts across the Channel to their plants in the UK, with Nissan and Honda already scaling back plans here.

Mr Kono also added that a new UK-Japan trade deal would take time to agree. “There is going to be some gap when we have to go back to the WTO (World Trade Organisation) rules,” he added.

Mr Johnson, in an interview with ConservativeHome, said the “policy of the Government”, if he is Prime Minister, would be to leave on October 31 “deal or no deal”.

Pressed on whether this would mean senior Tories such as Greg Clark and Amber Rudd would be automatically excluded from the Cabinet if they could not sign up to such a policy, he added: “I want obviously to have a broad range of talent in my government, the government that I will lead, but clearly people must be reconciled to the very, very, very small possibility, and I stress it will be a very, very small possibility, that we would have to leave on those terms.”

However, whoever wins the leadership contest will face huge opposition in Parliament to a No Deal.

The Government’s working majority, with the support of the Democratic Unionist Party, could be cut to just three if the Tories lose the Brecon by-election, which is expected to take place on August 1 after Chief Whip Julian Smith moved the writ for it today.

An extraordinary threat to stop the supply of government money for public services was also levelled by MPs this morning, who are determined to stop Britain crashing out.

An amendment was put down by Tory MP Dominic Grieve and Labour’s Dame Margaret Beckett that, if passed, would cut off the Government’s cash for four areas including international development, education and welfare payments.

Former attorney general Mr Grieve said: “It is the only mechanism we have to send a message to the Government of the unacceptably of taking us out of the EU without a deal.”

Meanwhile, consultants PwC today predicted zero GDP growth between April and June as a result of disruption caused by the original Brexit deadline of March 29. This would be a sharp slowdown from 0.5 per cent in the first quarter.