U.S. businesses, Britain’s biggest foreign investors, largely factored in the vote to leave the European Union and now want to see exit talks progress slowly, a top executive at the U.S. Chamber of Commerce said.
Investment from across the Atlantic will slow sharply as companies gauge the fallout, Myron Brilliant, head of international affairs at the biggest U.S. business lobby, said in an interview late on Monday in Istanbul.
“You will see minimal investment going to the UK in the short term, (then) a watchful period to see how Britain and Europe negotiate the exit,” he said, adding U.S. investors now want to see Britain at least remain part of the EU trade bloc.
The chamber is widely viewed as part of Republican establishment but has clashed over trade policy with both the Democrats’ Hillary Clinton and Donald Trump, the presumptive Republican candidate for President in November elections.
The pound has plunged to a three-decade low since the Brexit vote, and investors have warned that Britain, until now the world’s fifth-largest economy, faces years of economic uncertainty.
Brexit also upended Britain’s political order. After party rivals all dropped out, Theresa May, 59, emerged as the next prime minister, to take office on Wednesday. She will now lead divorce proceedings with the EU under Article 50, the formal mechanism for leaving the bloc.
“The incoming prime minister will want to go slow. She will be under pressure from European leaders to move faster, but I suspect she will not invoke Article 50 until she absolutely has to,” Brilliant said in an interview late on Monday in Istanbul.
“It is the wise course of action for her.”
Washington backed Britain in the EU and worries its departure will hit the global economy.
U.S. companies, especially in the financial industry, that have used London as an entry point to the EU are likely to shift some jobs to Frankfurt and other continental capitals, because Britain will no longer serve as a regional hub, Brilliant said.
“The goal I am sure will be to stay in the single market, which will be less disruptive. But to do that, the British are going to have to make concessions, particularly on immigration.”
Brexit is not “a death knell” for the Transatlantic Trade and Investment Partnership (TTIP), which seeks to reduce regulatory barriers, but it will slow talks and makes a deal this year unlikely, he said. Britain was a proponent of TTIP.