Even as various data suggested a steep drop in foreign investments in the United Kingdom and a six year low for the outlook for growth, British companies are “praying for an extension to article 50” and not a no deal Brexit.
The growth prospects reported by companies were at their weakest for almost six years according to a statement from the Confederation of British Industry. On the other hand, there has been a drop of 11 per cent year on year in the number of acquisitions of UK companies by foreign buyers according to other research data.
These ‘prayers’ and warnings were seen following a statement by the British Chambers of Commerce which said that contingency plans had already been triggered by thousands of the companies it represented. Such contingency plans also included the ultimate decision to move out of the UK.
“Many of the businesses we’re speaking to are praying for an extension to article 50”, and are hoping that there would be a delay to the self-imposed 29 March deadline of the UK leving the European Union, said James Stewart, the head of Brexit at accountancy firm KPMG.
While all of the larger companies in the UK were not in full Brexit preparation mode, there is a wide difference in the levels of implementation of their individual plans for a no deal Brexit, he said.
“At this stage even our most-informed clients feel as if anything could happen,” he said. “They’re thinking about getting products from A to B, market access and staffing up situation rooms for April. Forecasting the outcome of Brexit is a bit like trying to predict a greyhound race; there are no safe bets.”
Based on its survey of British firms across the distribution, manufacturing and service sectors, the CBI said that the private sector in eth country was “stuck in neutral” as most had recorded zero growth in the last quarter. Since its assessment since April 2013, the overall picture was the most stagnant, said the business group. These were because of investments being held back because of Brexit and household spending being cut off because of squeezed real earnings.
“Brexit deadlock, diverted investment and low business confidence are hitting firms hard. Every business will feel no deal is hurtling closer. Politicians must come together and act at speed to protect the UK’s economy,” said Rain Newton-Smith, the CBI’s chief economist.
Deals were being stalled because of Brexit as investments were being delayed particularly by European companies, said Pinsent Masons, an international law firm. Compared to 159 acquisitions in the last quarter of 2017, the number of takeovers in the same period last year dropped by 11 per cent to 142.
“Fears over the outcome of Brexit have intensified, choking bids for UK companies. European buyers of UK companies have been particularly skittish in recent months which likely reflects the greater exposure they already have to the potential fallout from Brexit,” said Andrew McMillan, a partner at the firm.
(Adapted from TheGuardian.com)