Brexit has already meant three years of profound uncertainty for companies in the United Kingdom. On Thursday, the reign of confusion was extended by another six months.
The last-minute Brexit delay granted by the European Union removes the immediate threat of a damaging break with the bloc. But it also means that some companies will further delay investment decisions.
“Sustained uncertainty is leaving business with its hands tied, reluctant to make everyday decisions on recruitment, expansion, and investment,” said Catherine McGuinness, policy chair at the City of London Corporation, which represents the financial industry.
Sustained uncertainty is leaving business with its hands tied.”
Britain now faces a deadline of October 31 to leave the European Union, its biggest trading partner. The British Chambers of Commerce said enthusiasm among its members for the delay is limited.
“Businesses will be relieved, but their frustration with this seemingly endless political process is palpable,” said BCC boss Adam Marshall, who has compared Brexit to setting a car’s GPS system for an unknown destination.
A weak housing market, slumping autos production, declining investment and downbeat executives all suggest that continued confusion over Brexit has caused the UK economy to stagnate.
A strong labour market and robust consumer spending haven’t been enough to prevent growth from slowing. The UK economy grew 0.3 per cent in the three months to February, a performance boosted by Brexit stockpiling.
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Business investment fell 0.9 per cent in the final three months of 2018, marking the first time investment has declined in four consecutive quarters since the global financial crisis. Surveys suggest investment took another hit in the first quarter of this year.
Companies have been forced to spend big on preparations for a disorderly Brexit, which would mean new trade barriers and major delays at border crossings.
Some companies, including the drugmakers Sanofi (GCVRZ) and Novartis (NVS), have been stockpiling treatments in the United Kingdom. Some manufacturers, food suppliers and supermarkets have done the same. EasyJet (ESYJY) said last week that continued uncertainty was reducing demand for flights in Europe. The CEO of Tesco (TSCDF), Britain’s biggest supermarket chain, said Wednesday customers were showing signs of “Brexit fatigue.”