COMPENSATING carmakers in Britain for any post-Brexit tariffs on exports to Europe could see the U.K. Government hand the companies more money than they need to pay the salaries of all their British workers, an analysis of corporate filings shows.

    Japan’s Nissan said in September it would only commit to new U.K. investment if it received a guarantee of compensation to offset any such tariffs. Last week, it agreed to build new models in the country after Prime Minister Theresa May assured it the government would provide support to preserve its competitiveness in the EU market after Brexit.

    The nature of the Nissan deal, which gave Britain a crucial corporate endorsement as it prepares for life outside the European Union, is unknown. The government said there hadn’t been a “detailed and specific” agreement on tariffs.

    If Britain does not secure a free trade deal with the European Union, carmakers in the country could face export tariffs of 10 percent, the level the EU imposes on cars imported from outside the bloc.

    The cost of compensating Nissan, which has 2.9 billion pounds (US$3.5 billion) in annual EU exports, would be 290 million pounds a year. That would exceed the company’s British wage bill, which was 288 million pounds in 2015, accounts for Nissan’s main U.K. operating unit show.

    The pattern is followed across Britain’s carmaking industry.

    Eight of the biggest car exporters in Britain, including Jaguar Land Rover, Toyota, Bentley, Mini, Rolls-Royce, Aston Martin and Honda, are all foreign owned. Their wage bills averaged 7.5 percent of total operating costs and 7.7 percent of turnover.

    This suggests the cost of tariffs on vehicles exported from Britain to the continent — levied at 10 percent of turnover — would exceed the wages paid to British workers to build those vehicles.

    The U.K. Office for National Statistics and the Society of Motor Manufacturers and Traders industry group do not compile figures for the value of car exports to the European Union.

    But an estimate based on corporate filings and company statements suggests they totalled more than 10 billion pounds in 2015, around 40 percent of U.K. carmakers’ exports.

    This would mean carmakers in Britain could face additional tariffs of 1 billion pounds a year after Brexit, if the government does not secure a free trade deal for the industry. (SD-Agencies)