Are Brexit warnings from JP Morgan, Lush and Siemens coming true?

IT was a bitterly divisive battle over Britain’s future role in the world.

The European Union referendum campaign of 2016 ended, of course, in a narrow victory for the Leave side, swiftly followed by the resignation of prime minister David Cameron.

In Dorset, the campaign saw visits from Boris Johnson – who had reportedly infuriated the prime minister by deciding to support Leave – and from chancellor George Osborne.

Some eye-catching claims were made by Dorset’s biggest employers about the consequences of a vote to leave the EU. But nearly five years later, have they come true, or are they set to do so?

Dorset votes Leave as Britain looks set for Brexit

JP MORGAN

Claim: Up to 4,000 jobs could go in the UK

“Even the best outcome in my opinion will change the laws on how we could serve our clients around the EU. Today we can serve them here, after a Brexit we can’t do it all here … I don’t know the exact numbers, 1,000, 2,000, it could be 4,000 jobs around the UK.” – Jamie Dimon, chairman and chief executive, JP Morgan, June 2016.

It was one of the most dramatic moments in the referendum campaign locally.

Jamie Dimon, chairman and chief executive of JP Morgan – Bournemouth’s biggest private sector employer – visited its site at Chaseside, along with chancellor George Osborne.

Jobs at risk: JP Morgan boss’s stark warning to Bournemouth staff over Brexit

His warning was that a Leave vote would result in "years of uncertainty" and could see his company "reorganise" its UK business model with the loss of jobs.

“Even the best outcome in my opinion will change the laws on how we could serve our clients around the EU,” he said.

“Today we can serve them here, after a Brexit we can’t do it all here. We would have to start planning for that.

“I don’t know the exact numbers, 1,000, 2,000, it could be 4,000 jobs around the UK.”

The figure of 4,000 happens to be the number of staff the bank has in Bournemouth.

The importance of financial services to the local economy had even been highlighted by Boris Johnson during his time as mayor of London, when he said: “JP Morgan, is the biggest private sector employer in the whole of Dorset and that’s because London is a massive financial motor for the rest of the UK economy.”

Did it come true?

So far, the feared axing of thousands of JP Morgan jobs in the UK has not come to pass – although the company is expected to move hundreds of jobs from the UK to mainland Europe in the near future.

Mr Dimon wrote, in a 2017 letter to shareholders, that a “hard Brexit” would mean “moving 300-400 jobs around Europe in the short term”.

Brexit: JP Morgan job losses 'in hundreds' – for now

He added: “Although unlikely, there is the possibility that we could stay exactly as we are today. Unfortunately, the worst outcome would be much of London’s financial centre moving to the Continent over time. We hope for all involved that this outcome will not be the case.”

While a free trade deal with the EU was agreed just before Christmas, there was little about financial services – so the sector has been facing something like a hard Brexit. It is not clear what the long-term arrangements will be or whether EU regulators will be applying pressure to banks to move operations to mainland Europe.

As well as moving some jobs to the EU, JP Morgan is hiring in locations such as Frankfurt, so the EU is benefiting from the bank’s expansion.

On the other hand, JP Morgan is investing in the UK, with a new digital bank expected to bring 400 jobs to London and Edinburgh. In Bournemouth, investment has continued in the Chaseside site. And almost all the job movements planned so far have been sales and trading roles in the City.

JP Morgan to build canopy with solar panels over Bournemouth car park

Conor Burns, Brexit-supporting MP for Bournemouth West, says now: “I was absolutely incandescent the day Jamie Dimon came down. I thought that George Osborne was using Jamie Dimon as a decaffeinated version of the way David Cameron used Barack Obama to come in and threaten the bejesus out of us.

“I always thought the threats of 4,000 jobs and so on were scaremongering.”

Jens Holscher, professor of economics at Bournemouth University, is more cautious. “The large effects are unknown,” he said.

“Some of the financial services have relocated to Amsterdam already. That affects more the City of London, not so much us in Bournemouth at the moment. Having said that, this can change very quickly. Dorset is not front office, it’s back office, so they may stay.”

Verdict: Too early to say.

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LUSH

Claim: Cosmetics production for mainland Europe would happen abroad

“We can move the European production to Europe and still be as busy as we were last Christmas … all those people have been told they’re not welcome and not wanted by people in Poole, because Poole voted against it.” – Mark Constantine, Lush managing director

Lush boss Mark Constantine wrote a column for the Daily Echo ahead of the referendum in which he said: “Closing borders and weakening ties to our European neighbours does not feel like it will promote and expand British exports, instead the two things are in conflict.”

The referendum debate “feels like the known versus the unknown”, he said.

Earlier in 2016, he had said: “Should Britain come out of Europe, it would put a lot of pressure on us to move parts of our business that are currently in Poole into countries that are part of the EU.”

In the month after the referendum, Mr Constantine told the Echo that around a third of the company’s 1,400 manufacturing staff in Poole did not have British citizenship and “all those people have been told they’re not welcome and not wanted by people in Poole”.

He said Poole would continue to make cosmetics for the UK market, but production for the European market would take place on the continent instead.  

Lush founder: Voters said they don't want our EU staff - we'll grow our business in Germany instead

One outlet that picked up on the Echo’s exclusive at the time used the headline “Lush cosmetics moves to Germany because of Brexit”.

In fact Mr Constantine had stressed there should not be jobs lost locally, but that Poole would not benefit from Lush’s global expansion. “We have considerable growth. We can move the European production to Europe and still be as busy as we were last Christmas,” he said. “It’s not a question of cutting local production, it’s a question that the growth is going there.”

Did it come true?

Lush did soon step up production in Germany.

Lush steps up production in Germany and moves some jobs abroad after EU vote

It then said it had always intended to serve the mainland European market from factories on the continent, but that it had “done it with a bullet” following the Brexit vote.

Lush’s annual report for the year ended June 30, 2016, said that “everything has been done” to reassure staff that there would be no redundancies and that “there are opportunities within our new Germany factory should they wish to leave”.

Lush reports on coronavirus, Brexit and recession fears

The annual report June 30, 2019, written as the coronavirus took hold in 2020, confirmed that Mr Constantine’s prediction in July 2016 had largely come to pass. “The Lush Group has European manufacturing facilities in both Germany and Croatia, which are currently supplying most of the European retail markets,” he said.

“The prospect of Brexit and any potential impact of higher tariffs may lead to further markets being supplied from these facilities rather than from the UK. We continue to monitor the situation closely.”

Verdict: Has largely come true (though it may have happened in time anyway)

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SIEMENS

Claim: Leaving the EU “may become a factor when Siemens is considering future investment”.

“This uncertainty, and threat of increased costs, could make the UK a less attractive place to do business and may become a factor when Siemens is considering future investment here.” – Letter to all Siemens' UK staff

Siemens’ staff of around 500 in Poole make sophisticated traffic control systems used in major cities around the world, making projects such as London's congestion charge possible.

At the time of the Brexit referendum, the international conglomerate had recently created 45 jobs at the Sopers Lane site by transferring work from a German factory which it was closing.

Siemens: Britain is better off in the EU

In a letter to all 14,000 UK staff, HR director Toby Peyton-Jones stressed it was not telling them how to vote but that “Siemens believes that being part of the EU is good for UK jobs and prosperity and we have concerns about the possible effects of a vote to leave”.

"Most commentators agree that a Brexit would disrupt the economy in the short-term and we believe that uncertainty about the UK’s future relationship with the EU could have more significant and negative long-term effects,” he wrote.

Did it come true?

With the referendum over, the business rowed back fairly quickly from warnings about future investment in the UK.

Siemens WILL invest in UK despite Brexit warnings

In July 2016, chief executive Joe Kaeser told an event at the House of Commons that the company’s position had been misunderstood.

“We’re staying because the UK is a good place to do business,” he said.

“We never said the UK is in bad shape if it leaves the EU: we said the EU would miss a massive opportunity. Without the UK, the EU may never be able to stand up against superpowers like China and the US.”

PICTURES: 50 years of Siemens in Poole (it's where the bar code was invented)

In January 2020, Mr Kaeser told The National: "We are very localised in the UK...so I'm assuming there's not going to be a big direct impact.

"Should Brexit lead to a slowdown in the British economy, we may be affected indirectly because not as many people are trading any more or not as many people need power anymore. Although I very much regret for Europe that the third-largest economy will not be part of it anymore.”

Verdict: Has not come true so far.

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SUNSEEKER AND BARCLAYS

In some cases, the warnings were not as specific.

Wang Jianlin, chairman of the Dalian Wanda Group, the Chinese conglomerate which owns Poole’s luxury boat builder Sunseeker International, said in March 2016: “The most important thing is that it’s easy to exit but hard to re-join. There are certainly many disadvantages if Britain exited the EU.”

Sunseeker’s last annual report and accounts merely welcomed the “clarity” that Brexit was going ahead and said the group was continuing to monitor the negotiations that were concluding then.

Don’t do it: Bosses of Lush, Sunseeker and Barclays warn against leaving the EU

Jes Staley, chief executive Barclays – which employs around 1,000 people locally – said in 2016: “Having unfettered access to the great economies of Europe anchors some significant benefits for the UK.”

He has since said that some jobs which could have been created in London have instead gone to the EU, but that "I think Brexit is more than likely on the positive side than on the negative side”, at least as far as the City of London is concerned.

THE BIGGER PICTURE

The broader arguments about whether Brexit turned out to be a boon or a setback for the UK will clearly run for years.

Arch Brexit supporter Conor Burns says: “The referendum was always more about sovereignty and democratic control of government than it was about a short, medium or long term economic gain or economic disadvantage.”

Professor Jens Holscher says the coincidence of the pandemic hitting in 2020 make it “difficult to disentangle the effect of Brexit and Covid” .

His concerns include the new red tape around exports, Dorset’s reliance on the hospitality industry and the inability to hire labour moving from Eastern Europe.

“I’m still very sceptical, I must say,” he adds.