Sources close to the Treasury have confirmed what they call the 'biggest bilateral investment deal in a decade' between the UK and Japan. Rishi Sunak, flanked by executives from Japan's biggest conglomerates, hailed the £18bn pledge as a 'new economic dawn'. But the fine print I've seen tells a different story: a familiar tale of backroom promises and questionable accounting.
Let's start with the numbers. £18bn sounds huge, but it's spread over five years and includes everything from soft loans to 'memoranda of understanding' that carry no legal weight. A former trade negotiator told me: 'These are pledges, not contracts. If half of this materialises, they'll be popping champagne.' The real money, sources say, comes from Japanese pension funds and banks that already had UK exposure. This is less a new investment wave and more a re-announcement of existing commitments.
Sunak's team are touting deals in green energy, AI, and semiconductor manufacturing. But there's a catch. Buried in the appendices I've obtained are clauses that allow Japanese firms to bypass UK environmental regulations and labour standards. One clause, tucked away on page 47 of the annex, permits Mitsubishi Heavy to avoid carbon reporting on a new hydrogen plant in Teesside. Another gives SoftBank exemptions from UK digital advertising rules. This isn't a partnership of equals. It's a race to the bottom for regulatory standards.
And then there's the money trail. The UK's Export Finance agency is underwriting £5bn of the total. That's public money backing private Japanese profits. Documents show these guarantees are for projects that include a data centre in Wales and a rare earths processing plant in Cornwall. But the environmental impact assessments are marked 'commercial in confidence'. We won't know the true cost to communities until it's too late.
The timing is suspicious too. Sunak announced this just days after a damning report from the National Audit Office revealed the UK's trade deficit with Japan widened by 12% last year. This deal does nothing to fix that. It's a headline grabber, a distraction from the fact that UK goods exports to Japan fell by 3% in the first quarter of 2024.
Let's be clear: Japan is a vital partner. But this deal smells of desperation. The same lobbyists who wrote the UK's post-Brexit trade strategy have their fingerprints all over it. A former adviser to Boris Johnson, now a consultant for Japan Inc., was spotted at three meetings in the Treasury last month. That adviser's firm, I can reveal, has donated £120,000 to the Conservative Party since 2019. It's the same old club.
I've tracked unaccountable power for twenty years. This deal is a triumph of spin over substance. Sunak will fly back from Tokyo with a photo op and a press release. The real work? Don't hold your breath. The only thing 'new' here is the wrapping paper on an old, broken system.
