Brexit is triggering concerns over the UK’s long-term attractiveness to foreign investors that could impact major infrastructure projects, a new study by accounting giant EY has revealed.
The poll found that nearly a third (31 per cent) of global investors are predicting the UK’s attractiveness will “deteriorate” over the next three years.
EY said the figure was “well above previous norms, suggesting Brexit may be starting to colour investors’ views of the UK”.
It added: “The scale of the decline in the UK’s rating is unprecedented in our surveys over the last decade and is a major concern.”
The survey, conducted among 453 “international decision-makers”, revealed a sharp drop in confidence in the UK’s attractiveness in areas such as transport, infrastructure and labour skills.
On transport and logistics infrastructure, 63 per cent of respondents said the UK was attractive on this aspect for investment, compared with 75 per cent last year.
On local labour skills level, the figure for attractiveness fell 19 percentage points from 80 per cent last year to 61 per cent this year.
The results are included in a 35-page report, Time to Act, published by EY this week.
The study showed that in 2016 the UK retained its place as Europe’s leading country for foreign investment, securing a record number of projects.
But the report said that, while the outlook for 2017 also remained “robust”, there was a ”a range of evidence pointing to significant concerns starting to emerge in the UK’s medium to long-term attractiveness”.
Writing in the report, EY’s infrastructure leader Malcolm Bairstow said the UK must focus on having “world-class and connected infrastructure”, but that “this is unlikely to be achieved unless the sector can attract foreign direct investment and private finance to support both capital investment and infrastructure operations”.
He cited the “unpredictability” of the UK’s planning process and the “time and cost of getting things done” as the biggest barriers to investor confidence.
Speaking to Construction News, Mr Bairstow added: “The lack of confidence is due to the fact there are so many moving parts with Brexit and nobody knows what will happen, so there is uncertainty – and investors like certainty. I think it will affect construction and infrastructure.”
However, Mr Bairstow flagged that the UK still remained attractive to investors, given its relatively stable economy and political system.
He said there was an opportunity for the industry to ”bring some positives”, adding that the sector was making “renewed efforts to operate in a more efficient and joined-up way.”
Mr Bairstow added: “We have to fix productivity, efficiency and innovation – and there’s some good examples like Crossrail.”
His comments echoed those of industry consultant Mark Farmer, who told Construction News in an interview this month that “Brexit could be a blessing” as it would force the industry into tackling its productivity problem and lack of innovation.