Brexit


Brexit

The British citizens are to vote on June the 23rd over the faith of their relationship with the European Union. Although little research has been done over the consequences of this decision, some of the direct impacts of leaving would include deficit from trading with the EU where the country receives around £470Billion per year of foreign direct investment and 45% of its exports is directed towards the EU and 50% of its imports comes from it. Leaving the union would no doubt affect the trade with an extremely powerful trading partner. Furthermore, the country´s financial stability would be at stake and the country´s rating would be downgraded, as was confirmed by the rating agencies such as Moody´s. This would imply that foreign investors will shy away.

In the M&A market, the decision of the referendum is already weighing down. While the EU excluding the UK has seen a 48% increase in the Europeans deals announced during the first quarter of the year compared to last year, the UK had its worst quarter for deals since 2010 and the sterling has experienced the worst quarter against the Euro since 2008. Today, Chinese investors are   investing in Europe more than anywhere else in the world, drawn towards the energy, services and financial sectors, and the threat of the UK leaving has had significant negative impact on Chinese investment.

Brexitgraph

The UK was always considered as a safe route to the European marketplace and in case the exit occurs, it will no longer be a hub for investments unless very favorable trade agreements are arranged.

 

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