Is there actual evidence that the Brexit talks are causing shadows to be cast over the UK economy or as practical business people are we leaving the hype to the politicians and the media?
In the Spring and Summer the hard evidence was patchy but with the drawing in of the evenings a picture does appear to be emerging. Let's look at one bellwether of business confidence, lending. There is plenty of activity in the market but primarily focused on refinancing as companies seek to roll over existing loans and borrowing. Lending for investment however is not doing so well, businesses are not seeking to increase their exposure to debt in order to expand their operations. So perhaps investment is being financed from internal resources, absorbing some of the corporate cash mountain that has been growing in the UK over the past few years. Well again, the hard evidence doesn't support this proposition as corporate cash deposits are continuing to grow. A sensible response to the unseasonably low exchange rates as long as we can all rely on a tick up of £ Sterling in the post- Brexit era. Otherwise corporate treasury managers are going to be very red- faced holding more and more of a declining asset but of course we can always depend on our Lady of Threadneedle Street to keep a firm lid on inflation. But do you trust the politicians?
Equity, that must be the answer, we are going out to the markets and launching IPOs and Rights Issues to finance the new round of investment that is being planned in UK Boardrooms. Not much evidence of that either and at the PE end of the market, the cash is there but the opportunities aren't.
British companies do not appear to be in need of further debt or borrowing, a natural cyclical pause or are those Brexit Shadows creating a chill in the Boardroom?