Brexit throws US$82 b of investments into doubt
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.