GET SET FOR BOUNCEBACK BRITAIN
Deal to unlock billions in extra investment – and boost UK’s recovery from the Covid crisis
BUSINESS leaders last night predicted the Brexit deal would unlock billions in investment and pave the way for the economy to bounce back from the pandemic.
The eleventh-hour trade agreement, once confirmed, will mean firms exporting to Europe no longer face the threat of tariffs from next week and have clarity on the rules they must follow.
Economists said it would also lift uncertainty that has been hanging over the UK, and spur a surge of investment by entrepreneurs here and overseas.
Following the referendum in 2016, business investment tanked as firms lacked the confidence to plough large sums into new equipment or premises without knowing what the post-Brexit environment would look like.
But Professor Doug McWilliams, deputy chairman of the Centre f or Economics and Business Research, said: ‘This will be a boost and a big advantage for the UK economy.
‘No Deal would have led to such acrimony it could have set relationships with other countries in Europe back by ten years.
‘A deal will create a boost in investment, which has been on hold because of the uncertainty.’
Advertising tycoon Sir Martin Sorrell, chief executive of S4 Capital, said the deal was ‘psychologically important’, adding that Boris Johnson mus t now use the opportunity to modernise the economy. ‘It will mean we have more co- operation with Europe,’ he said. ‘Now we must go forward and build businesses abroad in Asia, Africa, the Middle East and the Americas. It gives us a chance to reboot and build a world- class digital economy in this country.’
Last night stocks and the pound had already rallied in anticipation of a deal – with a formal announcement expected to boost the financial markets further.
The agreement will also come as a particular relief for sectors such as car manufacturing, which relies on ‘just-in-time’ supply chains where components flow quickly across borders. Even a slight delay can create costly havoc. It will also be warmly greeted by food retailers, which were concerned about extra barriers to getting fresh produce on to shelves.
The deal could be positive for house prices. They are expected to fall next year because of the economic impact of the pandemic, but the Office for Budget Responsibility had warned the drop would be steeper if a No Deal Brexit caused mass job losses.
And although the UK still faces months of economic disruption from the pandemic, for most businesses the Brexit deal represents relief after years of turmoil. Justin Urquhart Stewart, a City investment expert, said t he deal ‘changes the landscape dramatically’.
He added: ‘Executives and entrepreneurs will be able to start making decisions again. Without a deal, there was a lot of nervousness. Now we have some great reasons to be optimistic for the UK and world economy in 2021: we have vaccines, we have a Brexit deal and we have a new leader in the White House.’
Neil Wilson, chief analyst at Markets.com, added: ‘It draws a line under years of fractious argument. The hardcore Remainers won’t be happy and the hardcore Brexiteers – but everyone in the middle will be.
‘ It’ll be interesting to see if investment flows from outside which have dried up in recent years start to come back.’
Russ Mould, investment director at AJ Bell, said the deal paved the way for a ‘potentially very strong bounce-back’ in the New Year – providing that the rollout of coronavirus vaccines was successful.
He added: ‘What this deal provides is certainty for businesses.’
Although finance is not covered i n the trade pact, it i s also expected to clear the air for better cooperation between the City and the EU. London is responsible for 84 per cent of the EU’s derivatives trading and 82 per cent of foreign exchange trading.
There were worries that a No Deal would have stretched ties between Britain and Europe to breaking point, prompting Brussels to take a far tougher regulatory approach.
‘Great reasons to be optimistic’