Britain’s manufacturing, transport, and utilities industries could take a huge hit if EU countries decide to stop investing in the UK in the wake of Brexit.
Nearly half the UK’s £1 trillion ($1.29 trillion) inward foreign direct investment stock is sourced from EU countries and the investment bank produced the below graph showing where it is going and which industries are most at risk:
Credit Suisse thinks investment drying up is a real problem, warning in a note to clients this week that “capital investment might prove difficult to sustain in the coming years.”
The reason is because Britain is deeply ingrained in the global supply chains, of which EU countries are a big part. The UK makes parts and products that are then worked on and re-exported to other countries. Credit Suisse fears that the uncertainty around Brexit means EU companies will source these materials from elsewhere, leading UK supply chains to “wither.”
Credit Suisse adds in the note, titled “Brexiting the supply chain:”
“Clearly it is not just FDI from the EU that could be at risk — investors from outside the EU that use the UK’s membership of the single market as a portal of access to the EU value chain may also be reluctant to continue to expand investment.”