UK business investment from global investors is expected to “significantly revive” following the announcement of a Brexit deal with the EU on Northern Ireland, according to Nigel Green, CEO and founder of deVere Group.
Green stated, “Since the 2016 Brexit referendum, and the intense political wranglings it has caused, business investment into the UK from global investors has faltered.
“The possibility of an all-out trade war between the UK and the EU, plus the multifaceted political fallout, has triggered major uncertainty – which investors avoided due to the risks involved.
“Companies are never going to heavily invest where there are high levels of uncertainty. This deal will help unleash business investment that has been held back by global investors.”
Green also noted that uncertainty triggered by the Brexit referendum had caused global investors to avoid investment in the UK, leading to a loss of £29bn in business investment and a slowdown in productivity.
Jonathan Haskel, a Bank of England interest rate setter, had previously noted that the lack of business investment growth since the Brexit referendum was equivalent to 1.3% of UK gross domestic product (GDP).
“The deal announced on Monday settles the dispute that has been raging since 2021 when the UK left the EU single market and customs union through changes to the workings of the Northern Ireland protocol, which was part of the Brexit agreement signed by Boris Johnson back in 2019,” said Green. “We expect this new development will help significantly revive business investment into the UK from global investors.”
Green also stated that the British pound is likely to be given a much-needed bounce now that a political agreement between the UK and the EU on the Northern Ireland protocol has been reached. “We expect the pound will enjoy a bounce amid hopes for improved trading relations between the UK and the EU, which bolsters investor sentiment on Britain’s economic outlook.”
Since Brexit, the pound has been out of favour with FX traders, with the UK currency falling nearly 18% against a basket of currencies since the referendum. However, Green believes that “We could now be heading past peak pound pessimism.”
“The deal on the Northern Ireland protocol helps bring back the certainty that investors need to invest,” Green concluded.
