The increasing likelihood of a no-deal Brexit is pushing the UK towards the largest fall in business investment since the financial crash, business leaders have warned.
The Confederation of British Industry (CBI) said that business spending this year is set to drop by 1.3 per cent compared to 2018 – the biggest decline since the 2009 recession.
Brexit uncertainty is resulting in firms withholding investment, hurting the economy and risking the UK’s competitiveness amongst the G7, the lobby group said.
CBI chief economist Rain Newton-Smith said, “For any business it’s hard to take spending decisions now. When the risk of a no-deal Brexit feels very real at the moment, why would you take a big decision now? You would wait and see until the end of October. The main risk, though, is we fall off a cliff of no-deal Brexit.”
The risk of a Britain crashing out of the EU with no deal caused investment to shrink by 0.4 per cent last year, even though investment in other major economies grew.
Tory leadership hopefuls Jeremy Hunt and Boris Johnson have both said they are prepared to crash out of the EU if a deal cannot be reached reached by the end of October, despite the massive harm such a scenario would cause.
The risks of not securing a deal were highlighted after Vauxhall owner PSA said plans to build the new Astra at Ellesmere Port were conditional on the terms of the UK’s exit from the EU.
Unite assistant general secretary Steve Turner said, “Boris Johnson and Jeremy Hunt need to wake up to the harm that a no-deal Brexit will have on people’s livelihoods and futures.
“They need to take no-deal off the table and commit to securing a customs union with the European Union which guarantees the frictionless trade and tariff free access that is central to the success of the UK car industry and wider manufacturing.”