Britain’s departure from Europe is even worse for the country’s economy than previously thought, British scientists predict. Foreign investment, a cornerstone of the economy, is down by 37%. That is a doubling of what was predicted earlier.
The researchers, from University College London (UCL) and the London School of Economics (LSE) to write in a new study on the consequences of Brexit for the European single market since its creation in 1992, this is very important for the country.
The UK has received most of the so-called foreign direct investment in the European Union over the past 20 years, according to LSE professor Mauro Campos.
This type of investment led to a flow of money and technology, knowledge and innovation. According to the researchers, the impact is long-term. For example, many foreign investors used the UK to export products to the rest of the European Union.
The Brexit will reduce foreign investment ‘significantly and substantially’, says Campos, who calls access to the internal market ‘very important’ for the British economy. The number of investments has been declining since the Brexit referendum in 2016. In 2018, the United Kingdom received GBP 49.3 billion. A year earlier, that was 80.6 billion pounds.
The researchers find that EU membership and access to the single European market is much more important, and the impact it has on the investment than a trade agreement such as the NAFTA agreement between the United States of America, Canada, and Mexico.
Many British institutions used the researchers ‘ earlier economic forecasts to calculate the long-term effect of a Brexit. The researchers present their results at a crucial time. London and the EU are engaged in a strong negotiation on a trade agreement. The deadline for that is Thursday.