The damage that Brexit uncertainty could cause to regions like the North East might not be felt for a number of years, a leading business figure has said.
John Allan, who is president of the CBI, as well as chairman of both Tesco and Newcastle-founded housebuilder Barratt, said around 80% of businesses were cutting back on investment as a result of the uncertainty surrounding the UK’s future relationship with the EU.
Those cuts to investment were likely to mean projects that would have led to growth in the future have been postponed or even cancelled, Mr Allan said.
His warning mirrors findings from the Bank of England, which this week said there had been a slump in business investment as a result of Brexit that would be prolonged by the latest delay in the process that put it back to October 31.
Mr Allan said: “At the moment, it doesn’t really impact on the man and woman in the street but what is happening is that a lot of relatively modest decisions on deferring investment, or moving activities outside of the UK, cumulatively they become quite significant.
“And then there’s uncertainty about when it’s all going to end. So what the CBI is saying to politicians of all parties, not just the Government, is that you really have to put your heads together and come up with a way through this.
“This uncertainty is costing the UK economy dear in terms of the future. It may not be having too much impact in the short term other than investment, but not investing today probably means not producing as much as you could tomorrow.
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“The cost of this, we will start to feel increasingly and politicians really need to show leadership to get us out of that.”
Mr Allan said he personally would support a second referendum if it brought some resolution to the Brexit impasse, though this was not CBI policy.
His warning came shortly after Bank of England governor Mark Carney also pointed to the lack of business investment as a major concern for the economy.
“The latest business investment intentions surveys point to further declines over the next few quarters, which would mark the longest run of falling investment in the post-war era,” he said.
On a visit to the North East - where he briefly started his career, working in sales for soap manufacturers Lever Brothers - Mr Allan said businesses in the region would be closely following the North of Tyne mayoral election.
He said he was also struck by the commitment of businesses in the North East to work together to improve the fate of the region, particularly on areas like skills and getting young people ready for the world of work.
