UK investors lose interest in British firms over Brexit

SMALL business investors are losing faith in firms in the UK and on the Continent and moving their attention further afield amid the uncertainty of Brexit and the Election. British investors’ interest in UK firms has dropped by 9.8 per cent compared with last year, and interest for those in every European country has also fallen, led by Belgium at 37 per cent.

Interest in businesses in the UK and Europe is down by 10 per cent overall. Meanwhile, UK investors’ interest has increased the most for Australian and Japanese businesses, with jumps of 82 per cent and 68 per cent respectively.

The findings are from a study by BusinessesforSale, an online market for small business investments, which lists 70,000 microbusinesses and small to medium-sized enterprises for sale.

It compared the online activity of investors from March 12 to April 14 this year and last. This was before the Election announcement, which may have brought even more uncertainty to the market.

The biggest interest in the UK by the number of foreign investors came from the US, rising 12 per cent. Australians were second, rising 79 per cent. Interest from Europe was down – from France by 33 per cent and from Germany and Ireland by 30 per cent.

Rufus Bazley of BusinessesforSale said: ‘Historically the UK has enjoyed consistently strong interest from investors both here and abroad. This survey suggests there has been an undeniable loss of confidence and interest from within the UK in both the domestic and global markets following Brexit, no doubt fuelled by the uncertainty the decision has created in the business community.’

Meanwhile, the number of visitors to the site from Asian countries was lower, but there was increased interest in investing in the UK – up by 207 per cent for Japanese investors, 56 per cent for visitors from Singapore, and 33 per cent for those in Hong Kong.

BAZLEY added: ‘The change of administration in America and the elections here and in France will also have an impact not only on indices like the FTSE100, but also the massive market of microbusinesses and SMEs.’

However, a separate study by private investment house IWCapital surveyed 1,000 independent investors with £10,000-£250,000 in investments and found six per cent planned to invest through tax-efficient investment schemes such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme this tax year.

Stocks and shares (23 per cent), property (11 per cent) and government bonds (7 per cent) were among the most popular asset classes for the current year. But the equivalent of 3.19 million investors said that interest rates being held at 0.25 per cent have made them reconsider their investment strategies for the year ahead. A quarter wanted to see the Government do more to support investors’ interests with their tax policies.

Luke Davis, chief executive of IW Capital, said: ‘Cash savings have long been the bread and butter investment option, but with interest rates at all-time lows and inflation rising, leaving funds in savings accounts can result in investors losing money in real terms.

‘As a consequence, investors are naturally turning to other asset classes, and our research shows that SME investment is rising in popularity.’