A recent report published this past week surveyed over 1,000 businesses in the U.K. This study was commissioned by Hitachi Capital and they found that 42% of large companies disclosed that they have either stalled or backed out of investment deals due to Brexit factors. This amounts to $81 billion in cancelled business investments since the referendum and many of them are concerned over rising inflation.
Since last June, the Sterling has lost 15% of its value against the dollar. Additionally, it has lost value against the Euro and many experts are predicting inflation rates to peak at 2.7% by the beginning of 2018.
Investment is more volatile than other components of GDP and is usually an early indicator for estimated GDP. It will be interesting to see how the government and central bank respond to this survey and other indicators.
http://www.cnbc.com/2016/11/11/brexit-to-blame-for-over-81-billion-worth-of-missed-investment-opportunities-report.html?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=104101347&yptr=yahoo
In interesting to see how volitile investment will get, especially when Brexit has affected investment deals amounting to around $81 billion while the pound sterling is losing its value against the dollar and inflation increases. It will definately be interesting to see what action the government will take.
ReplyDeleteIt is going to be interesting seeing what the central bank is going to do in order to grow the economy, because the Brexit has slowed down the economy and if the central bank doesn't do something soon the UK might be facing a recession. Also it is interesting looking at the value of the pounds and if it is going to keep devaluating as it is expected by most of the people.
ReplyDeleteThe investment component (or lack there of) as a result of Brexit is incredibly intriguing. This shows how important the power of market confidence in investment really is. It will be interesting to see how the market responds once Brexit is seen as a truly unlikely result.
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