Brexit costs UK $82 billion in lost company spending: Study
London: UK businesses have delayed or cancelled investments worth £65.5 billion ($82 billion) since the vote to leave the European Union, with more than 40% of large companies scaling back, a survey showed.
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.”
Overall, about one-third of UK companies delayed or abandoned spending plans in the wake of the vote. Small firms, which are less exposed than big companies to foreign-exchange markets and rely less on foreign investment, were less likely to postpone or delay investment, according to the survey. But they collectively accounted for 81% of the total investment lost.
The numbers were extrapolated from a survey of 1,015 businesses by polling company YouGov in the last week of October. Answers were collated and weighted with data from the Department for Business, Energy and Industrial Strategy.
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. About 42% of these firms have cancelled or delayed spending, the study showed.
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. “Confidence is very easy to lose, but it’s a bit harder to gain.”
Hitachi Capital UK, a subsidiary of Japan’s Hitachi Capital Corp. that provides financing to small and medium-size businesses, is the latest Japanese-owned company to weigh in on Britain’s EU exit. Japanese government officials and business leaders have urged Prime Minister Theresa May’s government to improve its Brexit communications or put inward investment at risk. Bloomberg