British firms cancel or delay $116b in spending

LONDON • Businesses in Britain have delayed or cancelled investments worth £65.5 billion (S$116 billion) since the vote to leave the European Union (EU), with more than 40 per cent of large companies scaling back, a survey showed.

Executives have been reluctant to follow through on spending plans because of a plunge in the pound and a lack of clarity over Britain's future relationship with the EU, according to the study published yesterday by the Centre for Economics and Business Research and Hitachi Capital.

"Everyone talks about uncertainty, but what does that mean?" Hitachi Capital UK chief executive Robert Gordon said. "Once you start putting a number to it, it becomes quite scary."

Overall, about one-third of British companies delayed or abandoned spending plans in the wake of the vote.

Small firms, which are less exposed than big companies to foreign exchange markets and rely less on foreign investment, were less likely to postpone or delay investment, showed the survey.

But they collectively accounted for 81 per cent of the total investment lost. 

The numbers were extrapolated from a survey of 1,015 businesses by polling company YouGov in the last week of last month. Answers were collated and weighted with data from Britain's Department for Business, Energy and Industrial Strategy.

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. About 42 per cent of these firms have cancelled or delayed spending, the study showed.

Mr 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," he said in a phone interview. "Confidence is very easy to lose, but it's a bit harder to gain."

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A version of this article appeared in the print edition of The Straits Times on November 15, 2016, with the headline 'British firms cancel or delay $116b in spending'. Print Edition | Subscribe