Brexit has shattered the U.K.’s image as a place for investment, the former chairman of one of the country’s biggest banks said Monday.
A second referendum on whether the U.K. should leave the EU may be inevitable, Gerald Grimstone, who served as chairman of Barclays, warned ahead of crucial Parliament votes this week on Prime Minister Theresa May’s Brexit deal. And he didn’t mince his words.
“Brexit is completely unpredictable for the U.K. … I think it’s been an unmitigated disaster for the U.K., and in the short term, it’s made the U.K. almost uninvestable,” Grimstone told CNBC’s Dan Murphy at the Global Financial Forum in Dubai Monday. “We have two contrasting scenarios before us, and nobody knows which way we’re going to go.”
May and other Brexit officials have tried to allay concerns of U.K. lawmakers with reassurances from the EU on key Brexit issues like the “Irish backstop”.But EU officials have so far offered May little relief, with both sides expressing increasing frustration at what they see as continued deadlock.
Game over for Theresa May?
Some politicians and business players have said that time is up for May, who’s already survived two votes of no confidence from lawmakers in her own party and from the opposition. The former Barclays chair stressed the urgent need for the U.K. to make up its mind on what Brexit will actually look like.
“I’ve got huge respect for PM May, but they didn’t get the politics right,” he said. “The country is going to have to make a choice at some point, either in the single market, or out.”
It’s time for a drastic change, Grimstone said — and that may mean a second public vote on Brexit, something that many “remain” lawmakers, as well as several business leaders, have called for.
“I think a second vote is almost unavoidable,” he said. “That vote might come through a general election and/or a second referendum. You cannot have a scenario where the government of the day is putting legislation through the Parliament and that legislation fails… If a government can’t get its legislation through Parliament, there will have to be a change of characters in the Parliament.”
UK investment is taking a hit — and could suffer more
Many international companies are withholding expansions, stalling investment plans and charting moves out of the U.K. as uncertainty reigns over the fate of the country and its status in relation to the EU.
And British firms have diverted $10 billion of investment to the EU due to Brexit, a report from the London School of Economics revealed last month. EU businesses have cut their spending in Britain, leading to losses for the U.K. of more than $13 billion to date, and the report said that figure may rise.
Consulting firm EY found that financial services firms plan to move $1 trillion in assets out of the U.K., and one study found that EU exports to Britain could halve in the event of a no-deal Brexit.
Still, a number of global firms continue to show confidence in the U.K., with major investments for new offices and headquarters coming into London from the likes of Apple, Google and Facebook. As for the pound, forecasters are divided — it could either soar or tank as far as 25 percent, experts say.
—CNBC’s Holly Ellyatt contributed to this article.
