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Investors Eschew Brexit Concerns and Go Long on the UK

UK Investment and Brexit
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February 28, 2017 By: , No Comments

The United Kingdom Remains an Attractive Investment Proposition

The June 23, 2016 Brexit referendum threw global investors into a tizzy. However, 8 months later an overwhelming number of global investors perceive the UK to be a top investment destination. A report was published on Monday, 27 February 2017, detailing Britain’s relative attractiveness as a top investment destination. Price Waterhouse Coopers (PWC) conducted the survey and discovered that Britain has not been adversely affected by the Brexit decision, and ongoing Brexit negotiations.

Based on the data, Britain is perceived in much the same fashion as European powerhouse, Germany. The overarching consensus from the polled investors indicates that the Brexit hullabaloo has not dissuaded investors from plowing money into Britain. Some 33% of the 550 global investors ranked the United Kingdom as a Top 3 destination for corporate investment. Some 1,300 chief executive officers also rated the UK accordingly. This figure marks a 19% uptick from June 23 when Britons voted to leave the European Union. The Prime Minister of Britain, Theresa May, has set April 2017 as her deadline for invoking Article 50 of the Lisbon Treaty. This initiates the process which officially disentangles the United Kingdom from the European Union.

 

How Does the United Kingdom Fair against Its Rivals?

The top countries on the list for investors included the United States and China. The United Kingdom and Germany fell into joint third place. Perhaps more important from an investment perspective is the City of London’s place on the spectrum. The City of London currently ranks as the #1 destination in Europe for international finance, banking, currency exchange and the like. According to the latest PWC poll, London is second behind New York City as the most important investment enclave. As evidence of the UKs attractiveness, Boeing Company announced that it will be investing £20 million in its first official production facility in the United Kingdom. The 25,000 ft.² complex will be based in Sheffield UK for production of Boeing 737, Boeing 737 Max, and Boeing 777 aircraft.

Various investment professionals cautioned about the use of the word ‘Important’ in the poll. Important could also be a reference to the impact that negative decisions in London could have on the financial performance of companies. There is tremendous volatility in the banking sector, given that passporting rights are at stake if Britain and the EU no longer have unfettered access to one another’s clientele. From the large pool of investors, some 45% described themselves as optimistic about growth prospects for the United Kingdom. That is a doubling of investor sentiment from last year.

 

What Factors Are Troubling Investors about the United Kingdom?

Markets abhor uncertainty and volatility. These are the factors that concern investors. Nobody knows quite what to expect when Britain officially extracts itself from the European Union, what with the dissolution of trade agreements that are decades old. If Britain embarks upon a policy of protectionism, this could adversely affect the profitability of companies trading in Britain and based in Britain. The geopolitical uncertainty generated as a result of the Brexit decision could have far-reaching implications for Britain and the euro zone. While President Trump’s potential trade policies have rattled the feathers of the US’ trading partners, that same negativity is generally not felt about the UK.

 
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Brett Chatz

About Brett Chatz

Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for spreadbettingreview.co.uk.

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