The long-term effects of the Brexit vote on the economy will become clear next year when profit growth at some of the UK’s largest companies is expected to drop considerably, according to a new study.
An analysis of forecasts for 2018 gives a grim view on the future for some of the UK’s biggest companies, with expectations that there will be a marked slowdown.
The survey of projections compiled by UBS for the Financial Times (£) shows the uncertainty of a post-Brexit future has resulted in some companies putting plans on hold or shifting operations to other parts of the EU.
It comes as WPP, the world’s largest advertising group, slashed growth forecasts for the second time amid cuts in ad budgets.
Analysts expect profit growth at Britain’s largest companies to rise by 7.2% in 2018, according to the FT analysis, compared with an anticipated 19% this year. Meanwhile, gains by companies listed in London as a result of currency fluctuation have been eclipsed by longer term worries.
“The currency is a kneejerk reaction that mathematically comes through,” Nick Nelson, head of European equity strategy at UBS, told the FT. “Years two, three and beyond there’s more uncertainty.”
Among the illustrations of the slowdown are Burberry’s planned trenchcoat factory in Leeds being put on hold and a 75% drop in investment in the car industry in the first half of this year. Nissan said it would continue production in the UK after receiving a promise of no tariffs or extra bureaucratic burdens on the sector.