Investors more confident on Brexit deal, but expect shrinking UK returns

Global investors are showing some confidence that Brexit negotiations will end in a trade deal, according to new research from trade body the CFA Institute, but increasingly think that Brexit will knock returns from UK investments.

Globally, almost half of investors now expect talks between Britain and the EU to end in some sort of trade deal – 25 per cent think this will cover goods and services, while 24 per cent lean towards goods only.

Yet 80 per cent of investment professionals worldwide think that Brexit will negatively impact UK returns. Non-UK EU investors were particularly pessimistic, with 90 per cent saying Brexit would be bad for UK investments.

"The emotional temperature as revealed in the latest CFA Institute Brexit survey is falling, but the most recent findings show considerable concern for the UK’s competitiveness as a financial centre," said Will Goodhart, chief executive of the CFA Society UK.

"In light of the uncertainty over how the Brexit trade deal negotiations will play out, an increasing number of survey respondents in firms with a strong UK presence expect to see that presence reduce."

A hefty 67 per cent of investors polled in the UK expect their firms to reduce their UK presence, while 76 per cent of those polled elsewhere in the EU expect their firm to do the same.

Meanwhile 64 per cent of UK respondents expect Brexit to negatively impact their firm’s ability to attract the best talent, echoing concerns raised in industries such as fintech and medicine.

Who will be the Brexit winners?

Investors placed Frankfurt as the most likely city to win from Brexit, although Paris also shot up in the rankings. Amsterdam also ascended into the top five to join Dublin and Luxembourg.

Germany and Switzerland were the countries most pessimistic about Britain's chances of securing a satisfactory trade deal with the EU, as in both countries the most likely anticipated outcome of negotiations was a UK "crash-out" EU exit.

Compared to last year, more investors now think that that EU strengthening is likely. But the percentage who believe Brexit will not actually happen has risen from five to 15 per cent.

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