Brexit throws US$82 b of in­vest­ments into doubt

The Myanmar Times - - Business -

BRI­TAIN’S shock vote to leave the Euro­pean Union has per­suaded many Bri­tish busi­nesses to can­cel or post­pone in­vest­ments worth more than £65 bil­lion (US$82 bil­lion), a new study shows.

The es­ti­mate was based on re­search from the Cen­tre for Business and Eco­nomics Re­search (CEBR) think tank, Hi­tachi Cap­i­tal and on­line poll­sters YouGov, which re­cently quizzed 1015 com­pany bosses about in­vest­ment de­ci­sions since the EU exit ref­er­en­dum on June 23.

About one-third of those de­ci­sion mak­ers stated that they had ei­ther de­layed or aban­doned in­vest­ment be­cause of Brexit.

The most fre­quently given rea­son be­hind this was the fall in the Bri­tish pound, or the linked rise in in­fla­tion­ary ex­pec­ta­tions.

Other fre­quently cited rea­sons were un­cer­tainty over Bri­tain’s fu­ture mem­ber­ship of the Euro­pean sin­gle mar­ket – and over Bri­tain’s eco­nomic health in the wake of Brexit.

“Based on the re­sponses given by busi­nesses on the value of their in­vest­ment al­tered for rea­sons re­lated to Brexit, we es­ti­mate the to­tal value of aban­doned and de­layed in­vest­ments since Brexit to be £65.5 bil­lion,” CEBR said in a state­ment.

“This re­flects de­lays and can­cel­la­tions to fu­ture in­vest­ment, as well as cur­rent in­vest­ment.”

The con­sul­tancy added that “the in­dus­try whose firms were most likely to say they had de­layed or aban­doned in­vest­ment be­cause of Brexit-re­lated fac­tors was IT and tele­coms”.

The pound has tum­bled to 7.5year lows against the euro and 31year troughs ver­sus the dol­lar as mar­kets priced in eco­nomic un­cer­tain­ties.

How­ever, ster­ling won back some ground af­ter the High Court ruled the gov­ern­ment must seek par­lia­men­tary ap­proval be­fore trig­ger­ing Brexit.

Bri­tish Prime Min­is­ter Theresa May has said she will for­mally trig­ger the two-year di­vorce process by the end of March 2017 but Brus­sels and Lon­don face gru­elling ne­go­ti­a­tions on a fu­ture trade deal.

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