Political and economic uncertainty emanating from the Brexit vote have contributed to make the UK the second riskiest market in which to do business – after only China – according to a new survey of senior executives in the finance and technology sectors.
Recent sweeping regulatory change was also a major factor in persuading company bosses that the UK was a high-risk bet.
A global survey of 300 company executives, published today by law firm Ropes & Gray, found that 13% thought the UK was the riskiest market for their business. The respondents were from the banking, private equity, asset management, technology, and life sciences and healthcare industries — roughly half stemmed from financial services.
China came top in the riskiest market stakes, with 28% of respondents citing that country. The US was identified by both 11% asset managers and private equity firms as the world’s third riskiest market.
More than a third of both asset managers and private equity firms cited China as their riskiest market to do business, but 19% of fund firms and 14% of private equity firms cited the UK as the most significant risk — ahead of China and the US.
Just 2% of asset managers and private equity firms cited France as the most risky, while neither investor group cited Germany.
Amanda Raad, international risk partner at Ropes & Gray, said: “There has been such a dramatic change in the regulatory and enforcement landscape of the UK – just as there has been in China – over recent years that investors must quickly adapt. Added to this mix is Brexit, which is only adding to the uncertainty.”
The executives surveyed said their companies were least prepared to address risk around regulation and compliance, with a majority of 57% citing it, and some 78% planning to devote the most resources to that area.
Those numbers were even higher among the subset of investment firms, with more than 60% of asset managers and private equity firms citing regulation and compliance as the risk they were least prepared for. More than upwards of 80% of this group said they were earmarking more resources to the area in future.
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