Deal­mak­ing in the UK Comes to a Stand­still Over Brexit Worry

The Economic Times - - Commodities Plus -

Manuel Baig­orri & Ruth David

Lon­don: As Europe holds its breath over whether or not the UK will stay in the union, com­pa­nies are hold­ing on to their cash.

Com­ing off of an eight-year record for merg­ers and ac­qui­si­tions, the UK just had its worst quar­ter for deals since 2010, ac­cord­ing to data com­piled by Bloomberg. First-quar­ter M&A spend­ing on and by com­pa­nies in the country is down 39% from a year ago.

Blame Brexit. Crit­ics have warned that the loss of trade and im­mi­gra­tion agree­ments could cause eco­nomic in­sta­bil­ity and push some busi­nesses out of the country. With its large bank­ing hub in Lon- don, the UK has been in many re­spects the fi­nan­cial cap­i­tal of the Euro­pean Union. The slow­down in deal­mak­ing ac­tiv­ity is poised to con­tinue un­til June when Bri­tons will vote to stay or quit the bloc.

“Brexit is hav­ing a neg­a­tive im­pact on deals, es­pe­cially those with a cross-bor­der an­gle,” Ste­fan Brunnschweiler, Zurich-based part­ner and head of cor­po­rate M&A at law firm CMS, said in a phone in­ter­view. “We have seen a num­ber of com­pa­nies and in­vestors who have post­poned their in­vest­ment de­ci­sions un­til af­ter the vote takes place.” — Bloomberg

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