The uncertainty surrounding the UK’s withdrawal from the European Union (EU) is hurting investment in the country, UK Chancellor of the Exchequer Philip Hammond has warned.
“It is absolutely clear businesses where they have discretion over investment, where they can hold off, are doing so – you can understand why,” Hammond told BBC on Sunday.
“They are waiting for more clarity about what the future relationship with Europe will look like,” he added.
The comments came in the wake of a new report by the Confederation of British Industry (CBI), which stated at least 42 percent of British firms had been forced to change their investment plans because of Brexit concerns.
The report, released Sunday, called on the government of Prime Minister Theresa May to quickly work out a deal for the divorce.
“To help British business remain optimistic and keep uncertainty at bay, the Government must work quickly to agree the terms of the transition and future trading arrangements,” wrote Rain Newton-Smith, chief economist at the CBI business lobby group
Hammond said the government was pushing for a transitional arrangement for the final deal with the EU to minimize the damage.
“Five weeks ago the idea of a transition period was quite a new concept, I think now you would find that pretty much everybody around the cabinet table accepts that there will be some kind of transition,” he said.
The minister described a transitional period as “right and sensible” for both sides and predicted that it might take a “couple of years” to complete.
Last week, TheCityUK lobby group warned that there was a deep distrust between the financial sector and the government.
The group advised May to fill the gap through more ethical and consumer-centric policies.
“The financial services sector is among the least trusted industries in the UK and has struggled to repair trust after the financial crisis,” the report noted.