The UK’s Brexit vote, and resulting uncertainty, has pushed the UK down the pecking order of countries global executives want to invest in, a new report has suggested.
But EY’s Global Capital Confidence Barometer predicted that the UK will “bounce back as a top M&A destination of choice” after a short-term “pause for thought”.
The top investment destinations, based on a survey of more than 1,700 executives in 45 countries, were named as the US, China, Germany, Canada, France and Japan, with the UK coming in seventh.
This was the first time in the report’s seven-year history that the UK dropped outside of the top five investment destinations.
The report said:
Brexit is a prominent example of the rise of geopolitical changes that are adding complexity to cross-border investments. In the longer term, we would expect the UK to bounce back as a top M&A destination of choice but the short-term uncertainty is giving investors pause for thought.
There are, in general, mixed opinions around the UK's M&A prospects after the Brexit vote.
Initially, experts predicted that activity would drop further in the second half of the year following a slow start to 2016, both in the UK and globally.
But the £24bn takeover of Cambridge-based Arm by Japan's SoftBank sparked hopes of an M&A revival, prompted in part by the devaluation of sterling making UK firms more affordable.
Then, in September, British company Micro Focus's $8.8bn of the software division of US giant Hewlett Packard was hailed as an assertion of post-Brexit confidence.
Mergermarket’s review of third-quarter UK M&A found a marked improvement on the second quarter. However, total deal values in the first three quarters overall came in at £70bn, down 44.5 per cent on the same period in 2015.