Major British companies’ risk appetite has edged lower over the past three months as elections next year and the prospect of a referendum on leaving the EU loom, a quarterly survey by accountants Deloitte showed yesterday.
Large companies are the UK’s biggest private investors, and Deloitte’s report raises a question mark over whether a recent rapid rebound in business investment may start to level off in the coming months.
About 65 percent of chief financial officers (CFOs) at British listed companies and subsidiaries of large foreign firms said it was a good time to take on more risk, down from a record high of 71 percent in the first three months of this year.
“The macroeconomic worries that have acted as a drag on corporate activity have eased ... but with the general election less than a year away, uncertainties around political and policy risk have moved center stage,” Deloitte’s chief economist Ian Stewart said.
Deloitte said CFOs’ top concern was the general election in May next year and the risk of new government policies, followed by a possible referendum on Britain leaving the EU.
Most opinion polls show a narrow lead for Britain’s opposition Labour Party, whose message on greater protections for consumers in the energy, lettings and banking industries has raised industry concerns.
The Confederation of British Industry said after a speech by the Labour leader Ed Miliband on Thursday last week that competition would not be achieved by “artificially intervening in markets to leave businesses with a lot of uncertainty, which will only serve to put investment decisions on hold.”
Many businesses are also worried by the governing Conservative party’s pledge to hold a referendum on leaving the EU if they win re-election.
Official data last month showed that business investment in the first three months of this year was more than 10 percent higher than a year earlier.
This was its biggest increase in two years and good news for the Bank of England, which wants Britain’s rapid recovery to be less reliant on consumers.
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