The third deadline of Brexit is just around the corner, and its unpredictability along with the unstable domestic political situation has made the business investments to erode. Prime Minister of UK, Boris Johnson has requested for another extension on the deadline from the European Union’s commission, much to the dismay of the companies. They were expecting the Prime Minister to push the Brexit deal before the next deadline through the UK parliament.
The ongoing uncertainty over the deal has stopped the companies from spending money on equipment, facility up-gradation or expansion. According to some experts, a completed Brexit would have been more favorable for the companies even with the existence of the trade barriers.
Boris Johnson has demanded a general election in the UK on December 12 of this year. It has put the future trade terms of the UK with the rest of the world in darkness. The economic delay was further confirmed after the Brexit extension until January 31, 2020, by the European Union.
Capital Economics’s Chief UK economist, Paul Dales remarked the delay as a massive blow to the economy and an extra drag to the uncertainty. Capital Economics also estimated that Britain’s economic growth would limit to a mere 1% in 2020. During the second quarter, the country’s economy has contracted for the first time in the last seven years.
According to official data, during five out of six quarters, the investment growth has only declined. According to research, the investment in the UK has reduced by 11%, while productivity has gone down by 5% during the last three years of uncertainty of Brexit.
The Motor Manufacturers and Traders of the UK said that the investment in the automobile field had gone down by 70 %, making it on $90 million in the first half of this year. This has put the operations of auto-giants such as Honda, Nissan, PSA etc. in jeopardy. The Brexit deal that is negotiated between the EU and Boris Johnson has a transition period that extends until the end of 2020. Meaning, the companies will have to bear at least another year of uncertainty.