Brexit´s effect on Europe and why Britain is still seen as the best place to invest

November 18, 2019

The vast uncertainty and confusion surrounding Brexit has been looming since the referendum´s result was first announced on 23rd June 2016.

Since then, countries around the world, not just those associated with the European Union, have been preparing for how they believe the Brexit bullet will ricochet off Britain and affect their home territory.

Those that have stronger ties with the British Isles have been experiencing the rollercoaster ride alongside the UK, following the political fluctuations as closely as the entire population of the original initiator to see how it might affect their future.

However, the latest research proves that any skittish investor who has fallen into the media´s trap of scaremongering to ditch any and all British investments will come to regret their decision later on.

Some rarities who have been involved in a classic case of the blind leading the blind have jumped ship, but into one that is rapidly sinking.

Although the bloc is a single market, each country has a unique relationship with the United Kingdom and therefore Brexit, meaning their movement of goods, services, people and capital will also be influenced.

Ireland is the most vulnerable to tariffs and changes in trade. Nearly 14 per cent of its exports go directly to Britain, and the majority of all its other trade has to pass through the country at some point.

Second to the potential effects of Brexit is Germany. A wide range of industrial products are exported to Britain, including almost 800,000 cars annually: equal to 14 per cent of all made domestically. It is estimated that 5.48 per cent of Germany´s overall GDP will be exposed to the departure of the UK from the European Union.

The Netherlands trade with Britain is also very significant and it is expected that 4.39 per cent of the country´s GDP will be affected by Brexit. Similarly, 3.50 per cent of Belgium´s GDP will be influenced, followed by 2.19 per cent in France.

Although Britain was the instigator of Brexit, it appears that the small but mighty island isn´t reaping what it sowed. Shrewd investors are undeterred by any political turmoil and are taking the advice of someone considered to be the best investor of all time, Warren Buffett. His famed quote is: “Be fearful when others are greedy and greedy when others are fearful.”

Throughout 2019 so far, fintech companies alone have received record levels of investment from the US. UK businesses have gained $4.4bn (£3.4bn) in just 11 months, of which three-quarters was designated to London. Britain´s capital city is now the world´s number one city for fintech investment, overtaking New York.

Also, investment into UK quantum computing, blockchain and artificial intelligence is expected to triple over the next five years. Earlier in the year, former Prime Minister, Theresa May, said that the government would invest £153m into quantum computing.

London´s financial prowess is undeniable; the global hub hosts 37 per cent of the world´s currency dealing and 18 per cent of cross-border lending. Therefore, large companies and astute investors are keeping their confidence in the city, and country´s, ability to remain an asset to the world of derivatives, asset management, insurance and investment banks.

Examples of other UK-based and foreign investments into Britain during 2019:

  • Boeing created a £2m investment scheme for UK-based aerospace startups
  • The new government aims to supercharge the productivity of UK businesses with £88m of funding
  • Non-profit organisation, Creative England, unveiled a £24m investment fund for SMEs within the creative sector
  • Lidl GB has pledged to spend £15bn on British suppliers over the next five years
  • UK government supplied £34m in funding autonomous systems and the development of care robots
  • Culture Secretary, Nicky Morgan, announced £250m in funding for innovative cultural projects, libraries, museums and creative industries
  • Temasek and Reefknot joined together for their debut investment into UK startups
  • Chinese industrial giant, Jingye, is expected to purchase British Steel in a deal worth £70m

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