U.K. businesses have delayed or canceled investments worth 65.5 billion pounds ($82 billion) since the vote to leave the European Union, with more than 40 percent of large companies scaling back, according to a new survey.
Executives have been reluctant to follow through on spending plans because of a plunge in the pound and a lack of clarity over the U.K.’s future relationship with the EU, according to the study published Monday by the Centre for Economics and Business Research and Hitachi Capital U.K.
“Everyone talks about uncertainty, but what does that mean?” Hitachi Capital U.K. Chief Executive Officer Robert Gordon said. “Once you start putting a number to it, it becomes quite scary.”
Nervousness among executives is in part due to uncertainty about what a new deal with the EU will look like. Pro-EU group Open Britain said Monday that the the U.K. could face a billion-pound hit from losing access to the bloc’s free-trade agreements with more than 50 countries across the world.
Importers of everything from transport equipment and chemicals to food and textiles would have an additional 1.2 billion in costs, while exporters would be undermined by new tariffs in other nations, it said, citing a separate report by CEBR. The U.K. would have to renegotiate deals with each country individually and it “would be far more difficult to negotiate bilateral agreements of comparable scope” in a hard Brexit.
Higher costs “would be footed by businesses and passed on to consumers with higher prices in the shops,” said Open Britain’s Peter Mandelson, a former EU trade commissioner.
The CEBR investment report showed that about one-third of U.K. companies delayed or abandoned spending plans in the wake of the June referendum. Small firms, with less exposure to currency moves and foreign investment, were less likely to postpone or delay. But they collectively accounted for 81 percent of the total investment lost.
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. The survey of 1,015 businesses by polling company YouGov was carried out in the last week of October.
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 U.K., 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.
“Leave campaigners talk about all the free-trade deals we can sign outside the EU, but do not appreciate the value of those we already have,” Mandelson said. “The EU is a leader in global free trade and we should seek to preserve its benefits, as far as is possible.”