New analysis by the Labour Party reveals the Conservatives’ bungling of Brexit and reckless no-deal warnings will lead to £40 billion of lost business investment in this year alone.
The analysis 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 £187bn this year, over £40 billion lower than the £227bn forecast in 2016.
There is broad consensus that this is largely down to continued uncertainty surrounding Brexit, as well as the continued threat of No Deal. The CBI has said uncertainty was “crippling business investment”, while the threat of No Deal has put the UK on course for the biggest decline in business investment since the financial crisis. Meanwhile, 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 Business 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 has also noted a No Deal Brexit will only exacerbate the “remarkable” drop in business investment already being felt, as firms cancel projects currently on hold and cut back on future plans. There have been 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 Port Ellesmere would be cancelled in the event of No Deal.
Jeremy Corbyn, Leader of the Labour Party, 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. He is staking all our futures on a sweetheart trade deal with Donald Trump that would risk the takeover of our NHS by US corporations, while handing out tax cuts to the richest.
“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.”