UK: Business investment remains weak spot due to Brexit uncertainty - Rabobank

Analysts at Rabobank explain that weak investment intentions in the UK’s manufacturing and services sectors, although slightly higher in January compared to November, suggest that business investment will remain a weak spot going forward.

Key Quotes

“We expect that once Article 50 has been invoked and negotiations between the UK and the EU formally start, businesses will become even more careful because i) the Brexit has officially been put in motion and ii) a hard Brexit becomes more likely.”

“Despite PM May’s post-Brexit plan of a Global Britain, we see considerable hurdles when it comes to the execution of that plan. These hurdles are expected to suppress investments of domestic and foreign firms in the UK. We think the post-Brexit situation will be less rosy than currently outlined by Theresa May, mostly because the EU is expected to keep the UK from ‘cherry picking’ the benefits of EU membership, if the UK doesn’t accept the disadvantages that come with full membership. In addition, securing trade agreements with other countries might prove to be difficult and time consuming.”