A third of European companies are expected to cut investment spending amid Brexit uncertainties, a survey published on Friday (17 March) by Swiss financial services company, UBS, revealed.
UBS's Evidence Lab survey of 600 euro zone firms reveals 24% were expecting to reduce investment "somewhat", while 8% said they would do so "significantly". Meanwhile, a majority 54% of these firms, which vary in size and sector, said they had no plans to make any changes to their UK investments.
On the positive side, 10% of these respondents said they would "somewhat increase" their investments post the UK leaving the European Union (EU), while a small 2% said they would do so "significantly". Three quarters of the firms surveyed already have investments in the UK.
The survey follows the Queen giving her royal assent to the Brexit Bill, allowing Prime Minister Theresa May to trigger Article 50 to leave the EU. May, who has previously said that a no deal is better than a bad Brexit deal, is now expected to formally begin the process to leave the EU, although a date is yet to be given.
Meanwhile, the survey also highlighted that Brexit uncertainty was considered by most of these firms as the biggest risk factor with 28% of respondents saying this could have a "negative effect on their business". Around 27% of respondents agreed that the second biggest risk was the uncertainty related to policies of the new US administration. Other risks cited were the minority government in Spain, political climate in Italy and elections across France, Germany and the Netherlands.
The survey also threw light on the relocation plans of these firms amid the UK's decision to leave the bloc. It showed 40% of companies in Britain saying they would consider shifting part of their business from the UK to the continent. Of this, 10% said they would shift a "large amount" in capacity terms.
The UBS survey also showed that the reaction of companies to Brexit varied depending on the size and nature of operations. It was cited by the Financial Times as saying, "Consumer companies seem to favour the eurozone more than industrials and materials. SMEs also have a strong focus on the eurozone, whereas larger companies have a more diversified geographical approach."