Brexit is an “important source of uncertainty” for many UK companies, and is impacting on investment decisions, according to a new Bank of England report.
The quarterly agent’s report, published by the Bank of England, pulls together assessments from across the UK of local economic and financial conditions. The agents are described by the bank as its “eyes, ears and voice” across the regions.
Brexit is moving up the agenda for businesses questioned by the agents. Those citing Brexit as “not important” has fallen to its lowest level since it began reporting, while being the largest source of uncertainty for a growing number of respondents.
Some businesses have been deterred from investing due to uncertainty over the UK’s future trading arrangements, the report stated. Some larger corporates are, instead, investing directly overseas.
Some funds are flowing into overseas or cross-border facilities, such as office space and storage, “as a contingency”.
Finance is still “readily” available, but there is evidence of “increased discrimination” in lending decisions in a tougher business climate. Demand for finance has “remained subdued” relative to normal, it stated.
Strategic advisory services have been popular in relation to Brexit, said the report, while there is also demand for IT and logistics services. Lawyers and accountants also saw growing demand for supporting overseas clients on corporate transactions, with exchange rates helping make the sector, as a whole, more attractive.
While businesses are aligning themselves to export more products, there are concerns about market access and supply chains post-Brexit.