Half of EU businesses cut UK investmentStaff Writer | June 25, 2018
A survey of 800 EU27 business leaders from six major European markets published today by leading global law firm Baker McKenzie finds nearly half of respondents saying that their company has reduced investment in the UK and they had already seen disruption to their supply chains resulting from the Brexit vote.
Britain EU businesses says Brussels doesn't pay attention to them
Over three quarters polled last month said their business would be the same or better off if the UK were to remain in the EU. In Ireland, that percentage jumps to 97%.
Not only are they pessimistic about the future, they feel their voice is not listened to in Brussels with more than half (54%) thinking their views have not been sought and are not well represented in the EU's Brexit negotiations.
Nevertheless, 78% of EU27 businesses have already made changes to their operations or strategy - putting paid to the notion that EU companies are treading water while they await the outcome of negotiations.
Three quarters of respondents believe that the EU should make concessions to the UK to secure a better trading relationship for EU27 businesses, with support for concessions in Spain and the Netherlands significantly higher still.
The survey confirmed that a Free Trade Agreement with the UK is more popular within the EU27 business community than a Customs Union, with 67% of respondents deeming a FTA as being important to their business, versus 45% for the Customs Union. This chimes with the UK Government's approach, which has ruled out Customs Union membership post-Brexit.
Despite apparent goodwill toward the UK among EU27 businesses it is clear that, with nine months to go before the UK leaves the EU, Brexit is already having a significant impact.
More than half of the German businesses surveyed have already made decisions regarding trading with the UK, with a structurally weaker Sterling changing the long term business dynamics for an export-driven economy like Germany.
Companies in Sweden and France are also feeling the impact, with 57% of French companies saying Brexit has already disrupted their supply chains, while 55% of Swedish respondents have reduced their investment in the UK.
Companies in Spain are most prepared for difficult trade relationships with the UK post-Brexit. 67% of Spanish companies are planning for the potential loss of preferential trade terms, compared to just 55% on average in other markets.
However, 45% of all respondents have not yet done any preparation for the potential loss of preferential trade terms with the UK, underlining the difficulty of meaningfully preparing for something that has yet to be defined.
Perhaps because of the premature impact of Brexit on EU27 businesses, there is a clear current of frustration amongst respondents towards the UK for its decision to leave the union.
Over a third of respondents would like to see the UK punished under the terms of any future trade deal, with more hostility in the EU centres of power: 41% of French and 45% of German respondents support some degree of punitive action.
Perhaps surprisingly, 45% of respondents also say that Brexit represents an opportunity for their company to attract future business away from the UK, with optimism highest in Sweden and France where more than half of respondents see Brexit as an opportunity.
It was lowest in Ireland, where only 30% believe there could be an upside for their business.
French and German respondents feel most consulted. German businesses are however most nervous that Brexit will reduce the movement of people within their company. ■