Brexit to blame for over US$81 billion worth of missed investment opportunities
Report says Brexit caused large businesses to stall or back out on deals
UK businesses have either delayed or cancelled business investments worth more than £64 billion (US$81 billion) since the referendum to quit the European Union, according to a report from the Centre for Economics and Business Research (CEBR).
The report, published on Monday and commissioned by Hitachi Capital, surveyed more than 1,000 businesses and found that 42 per cent of large companies indicated that they had either stalled or backed out altogether on investment deals due to Brexit-related factors.
Firms identified the significant fall in the pound since the UK’s vote to leave the European Union on June 23rd, as well as concerns over rising inflation as the main reasons for getting cold feet on investment projects.
Sterling has lost 15 per cent of its value against the dollar since June when it was trading around US$1.50 and is the worst performing currency in the world in 2016. On Friday, the sterling was up 0.7 per cent to trade around 1.26 against the greenback.
The UK currency has also fallen against the euro, In August this year, two major airports in the UK were even offering less than 1 euro for £1 to holiday-goers. However, on Thursday the euro/sterling hit six-week highs amid investor uncertainty in regards to the US election and was trading at 0.86.
Meanwhile, inflation in the UK is poised for its biggest sustained increase since the Bank of England (BoE) gained independence almost 20 years ago. According to the BoE’s November report, inflation is forecast to exceed its 2 per cent target in early 2017 and peak at 2.7 per cent at the beginning of 2018.
Investment from the information technology and telecommunications industries was found to be the most sensitive to Brexit-related factors.