Risk to UK Economy from Japanese Recession

"The persistent poor performance of the Japanese economy can be significantly attributed to the high cost of doing business in their home market. This has led to high levels of investment going abroad with the UK being a major beneficiary." says Dr Simon Collinson, Warwick Business School specialist on the Japanese economy and business practices.

He explains that Japanese investors will continue to invest overseas whilst the costs in their home market remain high. However, future European Union expansion to include such countries as Poland, where labour costs are one third of that in the UK, could threaten future investment levels here. Importantly, it is the type of investment that results in new jobs and facilities that could be heading out of the UK.

Dr Collinson states that "Although Japan is the second largest overseas investor into the UK after North America, much of this investment in recent years has been institutional investment, which does not necessarily manifest itself in new jobs and facilities. Over recent years, jobs in the UK lost through closures or restructuring of Japanese owned companies have been roughly equalled by those created."