It’s looking a bit more likely as stories like these continue to roll out:
Investment by large British companies has slowed dramatically because of rising fears among finance directors about the potential turmoil caused by a vote for Brexit in June.
The possibility of Britain leaving the European Union is now regarded as the biggest threat to business by finance directors, eclipsing longstanding concerns such as weak demand in the euro area, sluggish growth in the UK and rising interest rates, according to a survey by Deloitte.
Ian Stewart, chief economist at Deloitte, said: “A fog of uncertainty has descended on the corporate sector. Perceptions of financial and economic uncertainty are back to levels last seen in early 2013 as the euro crisis abated.”
Sterling’s value has slumped 7 per cent this year on a trade-weighted basis. On Friday, the pound fell to a 16-month low against the euro, leaving the single currency worth 79.6p, capping a grim weak that saw the UK record its biggest postwar current account deficit.
The corporate sector is showing ever greater signs of anxiety over Brexit. Business investment fell 2 per cent in the final quarter of the year, showing companies were putting projects on hold ahead of the vote.
It gets harder for the pro-Brexit camp to argue that this is a good idea for Britain if the prospect of an “Out” vote in the referendum is sending waves of fear through financial markets and business investment starts to drop.
These things are hard to predict, but if uncertainty about the future means slower investment in the UK (a reasonable supposition), then Brexit will mean several years of uncertainty and therefore of slow growth. Like most divorces, Brexit is likely to take longer, be messier and cost more than either party expects at the beginning. This will mean years of uncertainty over the final terms of the UK’s relationship with the EU, with lots of the brinkmanship and theater that EU politics involves. All that would make for a toxic business climate in the UK. Throw in the prospect of another Scottish referendum as the Scots might want to stay in the EU even if that means leaving the UK, and the uncertainties all that would entail, and it looks as if a Brexit vote, whatever the ultimate merits, would lead to some tough times in the UK.
That prospect may well be enough to ensure that the UK stays in; any benefits are uncertain and in the future, but the downside is beginning to look both significant and inevitable.