More than a third of German-British businesses now plan to increase their investment in the UK over the medium term, a complete turnaround from six months ago.
A new survey from the German-British Chamber of Commerce shows that 35 per cent of such firms now think they will raise investment, up from just 5.0 per cent in the autumn.
On the other hand, while six months ago 20 per cent had planned to decrease investment, that figure has now halved to 10 per cent.
In line with the planned increase in investment, 44 per cent of companies expect to hire new employees – again a substantial improvement on last autumn when only 11 per cent planned to do so.
Perhaps most strikingly, now just 20 per cent of firms are planning to relocate activities due to Brexit, down from 70 per cent in October.
At the time, the business world was braced for the UK’s exit from the EU, and the potential disruption to trade that it could engender.
However, despite declining trade flows between Britain and the bloc, sentiment seems to have improved, at least in the short term.
Despite the improved sentiment, the chief executive of the Chamber of Commerce warned that Brexit would still be a “critical issue” for businesses.
“The effect of Brexit on the future structure of supply chains should not be underestimated, as trade barriers/customs formalities and extra costs remain a critical issue for many businesses”, Dr Ulrich Hoppe said.
Almost two-thirds of businesses agree with him, with 65 per cent saying that trade barriers or customs formalities would be the biggest barriers to business over the next 12 months.
Of the firms surveyed, 41 per cent have already made changes to their supply chains and logistics operations due to new rules around the import and export of goods.
For the survey, 117 online interviews were conducted with members of the German-British business community with UK operations.