Monday 29 May 2017

UK heading for 'disaster', warns Richard Branson

Richard Branson
Richard Branson

Kate Holton

Britain is heading for an economic disaster and Chinese investors have already pulled investments in the wake of Britain's vote to exit the European Union, Richard Branson, the boss of Virgin Group said.

Britain is heading for an economic disaster and Chinese investors have already pulled investments in the wake of Britain's vote to exit the European Union, Richard Branson, the boss of Virgin Group said.

The billionaire entrepreneur said his airline-through-finance group had cancelled a "very big" deal since the vote which would have involved some 3,000 jobs.

He also said some Chinese businesses were now reconsidering their business strategy in Britain. Several top economists, including at Goldman Sachs, say the referendum decision could trigger a recession within the year.

"I met with a group of Chinese businessmen yesterday morning who have invested heavily in England and who are now going to stop investing and withdraw investments they've already made," Branson told the Guardian newspaper.

Branson's comments came as other business leaders spelt out the impact of turmoil in global markets and the collapse in sterling. The pound fell to a 31-year low against the dollar following Friday's vote, but has recovered slightly.

City workers talk on their mobile phones near the Bank of England as the financial markets face uncertainty in the wake of Brexit on June 27
City workers talk on their mobile phones near the Bank of England as the financial markets face uncertainty in the wake of Brexit on June 27

Warren East, chief executive of Rolls-Royce, Britain's biggest manufacturer, told a conference organised by the Times newspaper on Tuesday that while day-to-day operations would not be affected, a lack of visibility was the company's biggest challenge.

"The uncertainty will last years, not months," he said.

Rolls Royce, which supplies aircraft engines to Boeing and Airbus, generates two-thirds of its revenue outside of the 28-member bloc.

Martin Sorrell, chief executive of the world's biggest advertising group WPP, said Brexit would accelerate the company's existing strategy of placing a greater focus on fast growing emerging markets and digital business.

"The implications for jobs in the short term are serious," he said, adding that it could take 10 years to renegotiate new trade agreements.

Other CEOs stressed the collapse of valuations and the fall in the value of the pound would open up new avenues.

Guo Guangchang, the billionaire co-founder and chairman ofFosun Group, China's biggest private conglomerate which owns a stake in British travel company Thomas Cook, told Reuters that the group's interest in investing in Britain and Europe had increased in the wake of the British referendum.

"Volatility is a friend not an enemy. Market volatility and panic will probably bring better investment opportunities. So we are increasingly looking for development opportunities in Europe and particularly in the UK," Guo said.

A weaker pound could benefit some, with online grocer Ocado saying it could help it secure a long-awaited overseas licensing deal and spell an end to food price deflation which has held back sales for British supermarket chains. Dido Harding, chief executive of mobile operator TalkTalk, struck a note of defiance: "What doesn't kill you makes you stronger. I refuse to be doom and gloom." (Reuters)

Irish Independent

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