UK Entrepreneurs Cutting Investments Ahead of Brexit

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BrexitAccording to a survey by the Confederation of British Industry (or CBI), UK entrepreneurs are engaging in concerning behavior, as they are beginning to cut their investment for next year. According to the data, the number of companies that went bankrupt went up by 35 percent in the last three months, hitting the highest level in 6 years, being the construction sector the most affected.

The main reason behind this, according to those who were surveyed, is the Brexit political crisis, which has caused the market agents to feel unease and uncertain regarding the future of the economy. The global trade tensions, mostly caused by Trump's trade wars.

“The Tories’ disastrous mismanagement of our economy and their botched Brexit process has undermined our manufacturing base," said the Shadow Chancellor John McDonnell when asked about those figures, Along with the mismanagement of our public finances, the reputation the Tories falsely claimed for economic competence has been completely shot. They are seen for what they are: a group of incompetent blusterers,” he added.

Business optimism went down sharply, hitting its lowest level since 2016, while optimism about exports for the next year hit an 18-year low.

A bittersweet outcome for the Brexit withdrawal agreement

Meanwhile, the prospects for Johnson's bill in the British Parliament are not the best ones. Despite passing in the parliament last night the British lawmakers rejected the proposed timetable, getting the British government into trouble since Johnson was aiming to leave the European Union by October 31. As if this were not enough, Johnson decided to pause the process of ratification of the Withdrawal Agreement.

Notwithstanding currently being in a dire situation, it is quite remarkable that, finally, the British parliament could agree on a Brexit deal.

"Not only did he [Boris Johnson] manage to get the EU to reopen the deal and make the changes necessary for people like me to support it" , said the Former Tory culture secretary John Whittingdale, "he then managed to get it through the House of Commons," he added.

The Labour party, on the other hand, is waiting for Brussels to grant an extension to the UK to begin pushing for a general election.

“I would like to see an election before Christmas to get Boris and his Thatcherite mates out of Downing st," said the Labour MP and Shadow Justice Secretary Richard Burgon," As soon as the EU has agreed on an extension we will support a general election,” he added.

The limbo that the Brexit Withdrawal Agreement is in has caused a sensation of unease among EU diplomats, especially considering that the UK government is trying to blame Brussels of the UK's inability to push through the Brexit withdrawal deal.

"We've done our part," said a frustrated EU diplomat, "The 'what next' cannot be seen as our responsibility. We negotiated two Brexit deals with two different UK prime ministers over more than three years. Now we're asked to grant yet another Brexit extension. We have to dance like Pinocchio in this game that isn't ours. It's very upsetting," he added.

Now it seems that Brussels may be looking into granting the UK another extension, though it's still not clear how long it will be.

"I will recommend the EU27 accept the UK request for an extension," said the EU commission president Donald Tusk right after Johnson announced its decision to suspend the process of ratification of the Withdrawal Agreement.

By 8:47 GMT the British pound went down by 0.16 percent against the US dollar, at 1.2852. Following this trend, it fell 0.18 percent against the Swiss franc and dropped 0.25 percent against the Japanese Yen, at 1.2713 and 139.28 respectively.

Ibeth contributes daily market commentary in both English and Spanish (both of which she speaks fluently) and she also manages the DailyForex mobile app to ensure that traders around the world are getting important market updates in real time.