A survey by the multinational consulting and accountancy firm EY on corporate deal-making found that Britain is in top position in the world for investment, defying Brexit uncertainty.
The UK knocked the US off pole position for the first time in the reports 10-year history. EY surveyed 2,900 senior executives in 47 countries between February and March. In contrast, in the October 2016 EY survey, Britain was in 7th place.
Despite Brexit uncertainty, the loss in value of the pound has made British assets cheaper to investors. However, Steve Krouskos, global vice chair at EY, told the Associated Press that UK culture including the English Language, a skilled workforce and a strong technology base has meant that Britain is still an “open environment for foreign investors.”
EY found that mergers and acquisitions are at a 10-year high, with 59% of companies planning a deal over the coming year, up from 52% last year.
Bucking the Trend
This trend is in marked contrast to the slowdown in the global economy. The International Monetary Fund (IMF) cut its global growth forecast for this year from 3.5% to 3.3%, largely because of trade tensions between the US and China.
Despite a contraction and reduction in investment in the UK car industry, there have been a number of high-profile investments in Britain over the last year, including Coca-Cola’s takeover of Costa Coffee for £4 billion and Comcast’s acquisition of Sky for £30 billion.
“The increase in acquisition appetite is a clear indication that executives are focused on their pursuit of growth, underpinned by high expectations of their own future performance. There is uncertainty in the market, but for many, disruption is driving M&A rather than stalling it — deals are a means to reshape portfolios at an accelerated pace and futureproof businesses,” explained Krouskos.
The UK narrowly averted crashing out of the EU without a deal, after the EU agreed to an extension until 31st October. Prime Minister Theresa May has had the withdrawal agreement that took almost two years to negotiate with the EU rejected by parliament three times and it is unlikely it will be ratified by British MPs.
To try and break the deadlock the government has opened discussions with the opposition Labour Party, although sources close to the talks have indicated that little progress is being made, as neither side has shown much willingness to compromise from their official positions.
As a deal of any kind seems unlikely at the moment, the UK will almost certainly have to participate in EU elections at the end of May, something that Brexiters will be deeply unhappy about.