Uncertainty causes slump
‘Reckless’ Brexit plan halts £40 billion of business investment
Nissan cancelled plans to build the next X-Trail in Britain
Brexit uncertainty and warnings of No Deal will lead to £40 billion of lost business investment in this year alone, analysis of UK government data has revealed.
It compares forecasts by the Office for Budget Responsibility in March 2016, just prior to the start of Brexit negotiations, with out-turns from the Office for National Statistics and most recent predictions from the OBR in March 2019.
Businesses are expected to invest around £187 billion this year, against £227bn forecast in 2016.
The figures were released 24 hours before Boris Johnson is due to visit Scotland following his election as Tory leader and Prime Minister last week. He will meet Scottish leader Ruth Davidson in what is expected to be a tense exchange of views on No Deal and the negative impact his policies are having on the party’s election prospects.
Labour says the threat of No Deal has put the UK on course for the biggest decline in business investment since the financial crisis. The CBI said that “Brexit uncertainty is crippling business investment”, while the British Chambers of Commerce has warned firms are cutting investment to put resources into contingency planning and stockpiling, with the growing possibility of No Deal expected to “suffocate” investment.
The Federation of Small Businesses notes sustained uncertainty is having a “chilling effect” on smaller firms looking to invest, while being clear that smaller firms are simply not prepared for a No Deal cliff edge.
The Deputy Governor of the Bank of England Ben Broadbent has noted a No Deal Brexit will only exacerbate the drop in business investment already being felt, as firms cancel projects currently on hold and cut back on their plans.
Labour points to numerous high profile examples of this lost investment. In February, Nissan announced it would not be building its new X-trail SUV in Sunderland, citing concerns about an uncertain future trading regime with the European Union. Vauxhall has also implied that investment to build its new Astra in Ellesmere Port would be cancelled in the event of No Deal.
Labour leader Jeremy Corbyn, said: “Boris Johnson won the support of fewer than 100,000 Tory party members by threatening a reckless No Deal Brexit, leaving businesses and workers facing serious risks and huge uncertainty.
“With Johnson and his divisive hard-right Cabinet gambling with people’s jobs and living standards, it is now clear that the only way Brexit can be resolved is by taking it back to the people.”
New Prime Minister and Tory leader Boris Johnson was quizzed last about Nissan’s latest job cuts and said they were unlikely to impact on the Sunderland plant.
Boris boost for Tories
The Tories have been boosted by a “Boris bounce” after the election of their new leader, according to a poll.
The Conservatives have gained 10 points to stand at 30%, a survey by Deltapoll for the Mail on Sunday showed.
That puts them five points ahead of Labour at 25%, with the Liberal Democrats on 18% and the Brexit Party on 14%.
But if Labour were to drop Jeremy Corbyn as leader, the poll says the party would shoot into the lead at 34%, with the Tories on 28%, the Brexit Party on 14% and the Lib Dems on 13%.