UK’s move puts £65bn of investment on hold

BRITAIN’s shock vote to leave the EU has persuaded many UK businesses to cancel or postpone investments worth more than £65-billion (about R1.1-trillion). The estimate is based on research from the Centre for Business and Economics Research think tank, Hitachi Capital and online pollsters YouGov, which recently quizzed 1 015 company bosses about investment decisions since the EU exit referendum on June 23.

About a third of those decision makers said 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,” the think tank said. “This reflects delays and cancellations to future investment, as well as current investment.”

It said “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 tumbled to 7.5year lows against the euro and 31-year troughs versus the dollar after the Brexit vote as markets priced in uncertainty.

However, sterling won back some ground after London’s high court ruled that 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 next year. Brussels and London face gruelling negotiations on a future trade deal. —

The industry [most likely to cite Brexit for delays] was IT and telecoms