Quarterly Economic Outlook

UK business investment

UK business investment
UK business investment impacted by Brexit uncertainty

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.


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.

Figure 1: Brexit uncertainty has undermined investment
Figure 1: Brexit uncertainty has undermined investment
As at 27 September 2019.

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

Important information

  • Where John Greenwood has expressed opinions, they are based on current market conditions, may differ from those of other investment professionals and are subject to change without notice.