Brexit cost: $82b in lost investment
london — UK businesses have delayed or canceled investments worth £65.5 billion ($82 billion) since the vote to leave the European Union, with more than 40 per cent of large companies scaling back, according to a new survey.
Executives have been reluctant to follow through on spending plans because of a plunge in the pound and a lack of clarity over the UK’s future relationship with the EU, according to the study published Monday by the Centre for Economics and Business Research and Hitachi Capital UK.
“Everyone talks about uncertainty, but what does that mean?” Hitachi Capital UK Chief Executive Officer Robert Gordon said. “Once you start putting a number to it, it becomes quite scary.”
Nervousness among executives is in part due to uncertainty about what a new deal with the EU will look like. Pro-EU group Open Britain said Monday that the UK could face a billion-pound hit from losing access to the bloc’s free-trade agreements with more than 50 countries across the world.
Importers of everything from transport equipment and chemicals to food and textiles would have an additional £1.2 billion in costs, while exporters would be undermined by new tariffs in other nations, it said, citing a separate report by CEBR. The UK would have to renegotiate deals with each country individually and it “would be far more difficult to negotiate bilateral agreements of comparable scope” in a hard Brexit.
Higher costs “would be footed by businesses and passed on to consumers with higher prices in the shops,” said Open Britain’s Peter Mandelson, a former EU trade commissioner. The CEBR investment report showed that about one-third of UK companies delayed or abandoned spending plans in the wake of the June referendum. Small firms, with less exposure to currency moves and foreign investment, were less likely to postpone or delay. But they collectively accounted for 81 per cent of the total investment lost.
Big companies, defined as those that employ more than 250 people, cited access to the EU’s single market, the falling pound and policy changes as their major concerns. The survey of 1,015 businesses by polling company YouGov was carried out in the last week of October.
Gordon urged the government to provide more clarity about its Brexit plans. “We haven’t got time to put all these different spins on it, and debate it endlessly in Parliament for years before we begin negotiating,” Gordon said in a phone interview. — Bloomberg
40% large companies scaling back