UK business investment

The Brexit saga continues to dominate political debate in the UK while having negative effects on economic growth by maintaining a high level of “regime uncertainty” - a lack of clarity about the rules, regulations, tariffs, and competitive position of firms after the country transitions to its new relationship with the European Union.

The fluctuations in the Brexit debate continue to be reflected in two key areas: the foreign exchange market for sterling and the domestic investment scene.

Elsewhere, such as in the labour market, in personal consumption spending, or in inflation trends the UK economy has continued to perform much as it did before the referendum of June 2016.

Downturn

Concerning investment, the downturn in capital expenditures by businesses is abundantly clear in “hard data” such as the gross domestic product (GDP) data on fixed capital formation as well as in “soft data” such as the CBI surveys on plant and equipment expenditure and the state of order books.

Unfortunately, these trends seem unlikely to change much until after the political and trading relationships between the UK and the EU are well on the way to resolution.