A new study suggests that one third of British businesses have scaled back their plans for investment since the UK’s referendum on European Union membership.
Hitachi Capital and the Centre for Economic and Business Research (Cebr) said on Monday that businesses either cancelled or postponed plans to invest as much as £65.5bn following the UK’s vote to leave the EU.
Over a fifth (22%) of the senior decision makers surveyed cited the fall in the pound as one of the reasons behind their decision. Another 21% said the uncertainty over the UK’s future membership of the single market impacted their decision, and 21% pointed to the possible impact of Brexit on the UK’s economic health.
If left unresolved, these factors could continue to impact upon planned investments for 2017 and beyond, Hitachi Capital said.
The report indicates that 42% of large and medium-sized firms cancelled or put off investing following the referendum, Sky News reported.
Medium-sized companies were found to be the most sensitive to Brexit-related factors, with 44% postponing or delaying investment decisions compared to just 23% of smaller firms. This reflects the fact that smaller businesses are less exposed to changes in the export and foreign direct investment environment.
Robert Gordon, chief executive of Hitachi Capital, called on businesses of all sizes to seize the opportunity presented by Brexit to forge new partnerships around the world while continuing to engage with the single market.
He went on to note that 70% of firms would be likely to resume investment if uncertainty of the UK’s membership of the single market was resolved.
“Exports from the EU to the UK totalled £290bn in 2015, firmly cementing the UK’s place as a crucial trade partner,” Gordon continued. “With this in mind, businesses must not forget we are in a strong position when it comes to ensuring that the UK negotiates the best possible trade deals. We must pull together and continue to make investments to send this message to the rest of the world.”
He concluded: “The fact that nearly three quarters of businesses would resume with investment if current pressing issues were resolved sends a clear message from businesses to the UK government — act quickly to prevent further losses.”