It’s been more than 100 days since the U.K. voted to leave the European Union and uncertainty remains over several issues, including continued membership of the single market.
There has been a lot of talk around whether the end result will be a “hard Bexit” – with the U.K. losing access to the EU single market and customs union — or a “soft Brexit” – with access to the single market retained. Either way, experts told CNBC that foreign companies were likely to continue to invest in the county.
The U.K. has a strong track record for foreign direct investment (FDI). Foreign investors own £10.6 trillion ($13.5 trillion) of U.K. assets, according to the Bank of England – that’s more than five times U.K. gross domestic product and makes the U.K. one of the top destinations for FDI both within the EU and globally.
FDI is crucial to any economy. It raises productivity, which helps output and wages, and boosts competition, according to the LSE’s Centre for Economic Performance.
One such company looking to invest in the U.K. – despite the Brexit result — is Campaign Monitor, an email marketing and automation software provider founded in Australia. Last week, the company announced plans to open a new office in London in order to better serve its European customers; the company has customers at around 25,000 companies in the U.K.
“Obviously Brexit creates uncertainty and I think the greatest concern is that there’s going to be probably years of uncertainty,” Alex Bard, CEO of Campaign Monitor, told CNBC in a phone call. “For us, (the decision to invest in the U.K.) made a lot of sense because of the density of our customers in that area, because we want to be close to our customers to help them succeed.”
Around 40 percent of Campaign Monitor’s customers are based in Europe, and of that, “A meaningful percentage — I would say a majority — are in the U.K.,” Bard said.
“(Brexit) certainly created a bit more uncertainty, but not enough to dissuade us from the investment that we wanted to make,” he added.
Other companies are likely to follow in Campaign Monitor’s footsteps as the U.K. economy has very strong fundamentals, according to Richard Wilson, CEO of TIGA, the U.K.’s games industry trade association.
“We have relatively low rates of corporation tax and overall a relatively low burden of taxation. We have a highly skilled workforce and the labour and product markets are lightly regulated. Those things are not going to change substantially,” he told CNBC during a phone interview.
“For those reasons, I think foreign direct investment will continue to be at a very high level into the U.K.”
Following the Brexit vote, other countries have attempted to become more attractive to start-ups in particular, however. Notably, France has upped efforts to appeal to tech companies and earlier in the year, Berlin advertised around the streets of London in an attempt to court U.K. start-ups.
But in the face of increased competition, there are some things the U.K. can do to prevent its start-ups from being poached.
“The first thing to do is encourage an environment that is favourable to start-ups,” suggested TIGA’s Wilson. “We’ve got a great tax regime to encourage start-ups. I think, secondly, we’ve got to make sure we have an overall tax system that is favourable to growing businesses.”
He stressed it was also important to have a good provision of access to finance for start-up companies.
“It’s a question of making sure that people who want to set up a business (or) people who come out of university, for example, to create a start-up or work in a start-up, that they have the opportunity to do so,” he added.
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