News ID: 238049
Published: 1136 GMT January 29, 2019

No-deal Brexit: UK firms praying for article 50 extension

No-deal Brexit: UK firms praying for article 50 extension
TOLGA AKMEN/AFP

British firms are ‘praying for an extension to article 50’ rather than face a no-deal Brexit as it emerged that foreign investment has fallen steeply and the outlook for growth has slumped to a six-year low.

The Confederation of British Industry said that firms’ reported growth prospects were at their weakest for almost six years, while other research shows the number of acquisitions of UK companies by foreign buyers is falling 11 percent year on year, theguardian.com reported.

The warnings emerged after the British Chambers of Commerce said that thousands of the firms it represented had already triggered contingency plans for a no-deal Brexit, including plans to move operations out of the UK.

James Stewart, the head of Brexit at accountancy firm KPMG, said, “Many of the businesses we’re speaking to are praying for an extension to article 50”, hoping for a delay to the self-imposed March 29 deadline for Britain to leave the EU.

He said that nearly all larger firms were now preparing for Brexit, but were at very different points in implementing no-deal plans.

 “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.”

The CBI said the private sector was ‘stuck in neutral’, with zero growth in aggregate in the last quarter on its survey of British firms across the distribution, manufacturing and service sectors.

The business group said that the overall picture was the most stagnant in its assessment since April 2013, with squeezed real earnings cutting household spending and Brexit uncertainty holding back investment.

Rain Newton-Smith, the CBI’s chief economist, said, “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.”

Pinsent Masons, an international law firm, said Brexit uncertainty was stalling deals, with European firms in particular delaying investment. Acquisitions dropped 11 percent to 142 in the last quarter of 2018, compared with 159 the previous year.

Andrew McMillan, a partner at the firm, said, “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.”

However, weak sterling was still encouraging US and Japanese buyers to take a risk, McMillan said, “They are calculating that a rational solution will be found. This is a real vote of confidence in UK companies, supported by tailwinds from a strong dollar and yen against sterling.”

 

 

 

   
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Resource: theguardian.com
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