Change of heart comes days after Britain’s carmakers issued a stark assessment of Brexit’s effect on the industry.

Nissan announced it cancelled plans to make its X-Trail SUV in the United Kingdom – a sharp blow to British Prime Minister Theresa May who fought to have the model built in northern England as she sought to shore up confidence in the British economy after it leaves the European Union.

Nissan said on Sunday it will consolidate production of the next generation X-Trail at its plant in Kyushu, Japan, where the model is currently produced, allowing the company to reduce investment costs in the early stages of the project.

That reverses a decision in late 2016 to build the SUV at Nissan’s Sunderland plant in northern England, which employs 7,000 workers. That plant will continue to make Nissan’s Juke and Qashqai models. The announcement on Sunday made no mention of any layoffs relating to the X-Trail decision.

“While we have taken this decision for business reasons, the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future,” Nissan Europe Chairman Gianluca de Ficchy said in a statement.

Less than two months before Britain is scheduled to leave the EU on March 29, Britain still doesn’t have an agreement on what will replace 45 years of frictionless trade. This has caused an enormous amount of concern among businesses in Britain, which fear the country is going to crash out of the vast EU trade bloc without a divorce deal, a scenario economists predict would hurt the UK economy.

Change of heart

The Nissan decision is a major setback for May’s Conservative government, which had pointed to Nissan’s 2016 announcement that Sunderland would make the SUV – months after the country’s Brexit referendum – as proof that major manufacturers still had confidence in Britain’s economic future.

Nissan’s change of heart comes just days after Britain’s carmakers issued a stark assessment about Brexit’s effect on the industry, warning their exports are at risk if the UK leaves the EU without an agreement.

Investment in the industry fell 46 percent last year and new car production dropped 9.1 percent to 1.52 million vehicles, in part because of concerns over Brexit, the Society of Motor Manufacturing said.

The group’s chief executive, Mike Hawes, described the threat of a no-deal Brexit as “catastrophic”.

He said the drop in investment is only a foreshadowing of what could happen if the UK leaves the EU on March 29 without a deal.

Vince Cable, leader of the Liberal Democrats, called Nissan’s move disconcerting for Sunderland’s community.

“It’s very worrying for the northeast and the workers and their families. I think that’s the utmost concern. But I think it does raise fundamental questions about the Brexit strategy,” said Cable.

Back to Brussels

Members of parliament, who last month rejected May’s Brexit deal with the EU, have instructed May to return to Brussels to renegotiate the arrangements for Northern Ireland.

The EU has rejected reopening talks on the so-called “backstop”, an insurance policy to keep an open border on the island of Ireland if Britain and the EU fail to reach a longer-term trade agreement before the end of a transition period.

Fears are growing over the risk of a disorderly “no deal” exit.

“The no-deal Brexit is an uncertainty that’s completely unacceptable for all sorts of people: farmers, car manufacturers, consumers. The government needs to absolutely take that off the table,” said Shami Chakrabarti of the UK’s main opposition Labour Party.

“I don’t think that the House of Commons will tolerate a no-deal Brexit. So Theresa May needs to stop running down the clock and using that terrible threat as some kind of bargaining chip with the EU.”

May said on Sunday she would seek a “pragmatic solution” to the parliamentary impasse over the terms on which Britain leaves the EU when she tries to reopen talks with Brussels.

“MPs said that, with changes to the Northern Ireland backstop, they would support the deal that I agreed with Brussels to take us out of the EU,” May wrote in the Sunday Telegraph newspaper.

“When I return to Brussels I will be battling for Britain and Northern Ireland, I will be armed with a fresh mandate, new ideas, and a renewed determination to agree a pragmatic solution that delivers the Brexit the British people voted for.”

Pro-Brexit Trade Minister Liam Fox said it would be “irresponsible” for the EU to refuse to reopen the Brexit negotiations.

“Are they really saying that they would rather not negotiate and end up in a ‘no-deal’ position?” Fox told Sky News.

“It is in all our interests to get to that agreement, and for the EU to say we are not going to even discuss it seems to me to be quite irresponsible.”