Brexit Britain and Booming Investment
They were wrong then and are wrong now.
Those who have read about the British economy after the 2016 EU referendum were, and probably still are, led to believe that investment would all leave Britain because of Brexit. They were wrong then and are wrong now.
Since the referendum, Britain received more investment, contrary to what the Remoaners will say. One example was when we heard that banks threatening to withdraw jobs from Britain as Brexit took place. On the contrary, as many as 20 banks wanted to open in Britain, with start-up lenders reckoning Britain remained a good bet. Research by PricewaterhouseCoopers found that 9 out of 10 of its clients with plans to start-up British banks haven’t shelved their plans as a result of Brexit, pointing to more than £200 million of investment in Britain. PwC said almost 20 banks and institutions looked to gain a foothold in Britain, including several from the EU states, as well as China and Japan. Britain’s banks talked about the new global opportunities presented by Brexit. These came about just over one week after the City of London was spooked by the surprise decision by voters to leave the EU. All this was before the Brexit talks started.
Fast-forward through the Brexit talks, which saw more investment pour into Britain. For example, on the 30th March 2018, the ONS quietly released the figures for Gross Fixed Capital Formation (GFCF). The GFCF covers investment across the whole economy, public and private sectors, manufacturing, construction, services and extractive industries. Examples of extractive industries include oil and gas. They showed the total opposite to the spin by the likes of the BBC and ITV that investors fled Britain following the Brexit vote. Indeed, if you read the The Spectator or the Telegraph, you’ll know investment in Britain actually grew by 1.1% in the fourth quarter of 2017, to a total of £84.1 billion.
Over the course of 2017 it grew by 4% compared with 2016. This was higher than for any other G7 country, with Italy following on 3.7%, France 3.5% and the US on 3.1%. The BBC doesn’t seem to think it as newsworthy. It didn’t make the business news on the Today programme, nor did the story appear on the business section of the BBC website. The Guardian didn’t bother with it, though it did big up statistics showing Britain had the slowest rate of growth in consumer spending in the G7. The Times carried a story about another piece of good economic news in the decline of Britain’s current account deficit. They failed to mention the investment figures. The only paper that gave the investment figures space was the Financial Times, although in a somewhat loaded way. The Financial Times suggested that it was down to a construction boom and the investment decisions in office space made before the EU referendum. Nevertheless, business investment accounted for £46.2 billion of the £84.1 billion invested in the fourth quarter of 2017. Over the course of 2017, business investment in Britain grew by 2.6%.
Another example was that UK tech was booming. As part of Indian Prime Minister Narendra Modi’s visit to Britain in April 2018, the UK-India tech partnership was launched. This was set to bring in millions of sterling in investment into Britain. This bold new partnership is the embodiment of the vibrant, global Britain we all want to see. The good tech news kept coming. Figures released in a report by law firm Pennington Manches revealed that investment in 2017 into British tech businesses reached a record £1.1 billion. Arriving alongside that, research by real estate firm Savills found that tech firms invested unprecedented sums in offices in the City of London. This wasn’t just in the City and the growing powerhouse that was London’s Silicon Roundabout. Cambridge, Manchester, Edinburgh, and numerous others across Britain are home to vibrant tech clusters attracting billions in investment each year. To double-down on this, in March 2018, tech accelerator bodies Tech City UK and Tech North merged to create Tech Nation, which is a nationwide organisation aimed at boosting Britain’s tech vitality and nurturing many tech businesses. None of this should surprise us. We’ve seen major investments here since 2016 from Apple, Google, IBM, Amazon, Microsoft, Facebook and a whole multitude of others.
The same investment positivity could be found in the pharmaceutical sector, when drug companies prepared to make hundreds of millions of pounds of investment commitments in Britain as part of a government effort to boost the life-sciences sector post-Brexit. That was on top of announcements in December 2017 by more than two dozen global companies. The pledges were a key piece of a broader multibillion-pound push by Britain to become more competitive with its EU exit. On the 10th June 2019, reports came out that Britain was home to more $1 billion tech start-up companies than any other country in Europe – by a country mile – and is behind only the United States and China. Research shows that entrepreneurs in Britain created 72 such companies. This was compared to 29 companies in Germany and 26 companies in India. The Times newspaper reported that investment into British tech start-ups topped $5 billion since January 2019. London was also home to more FinTech unicorns than San Francisco. London helped to produce around 20% of the billion dollar start-ups, with those 45 unicorn companies in London valued at around £116 billion.
We are getting that investment into Brexit Britain. Don’t expect the likes of the BBC to tell us this anytime soon.