Eleventh-hour agreement is "huge relief", say business groups.
Source - Daily Telegraph 25/12/20
Boris Johnson’s Brexit deal is poised to spark a dealmaking frenzy after years of uncertainty as the country begins a new chapter as an independent nation, a top investor has said.
As business groups and companies across the UK welcomed the historic accord, Richard Buxton of Jupiter Asset Management said it is likely to trigger a surge in mergers and acquisitions by firms seeking an opportunity to grow.
The agreement with the European Union - the most comprehensive ever signed by the bloc - could pave the way for a radical reassessment of the country's markets by international capital, Mr Buxton said. It may also spark a long-overdue boom in business investment after companies held back cash due to fears of a turbulent no-deal exit.
Sterling climbed to $1.3543 shortly before 6pm on Christmas Eve, close to its 2020 peak of $1.3624, after the deal was finally announced. Stock markets had already closed for the Christmas break.
Businesses welcomed the deal which secures no tariffs or quotas on goods crossing the border, describing it as a “huge relief” following lengthy talks which looked to be failing as recently as two weeks ago, risking steep tariffs and massive disruption.
Nissan welcomed the deal and said it “look[ed] forward to the continued success” of its UK operations.
Mr Buxton, head of strategy, UK Alpha at Jupiter, said the deal was “perhaps the best Christmas present many could have hoped for.”
He added: “Merger and acquisition activity has been picking up, and an end to ‘no deal’ uncertainty may well spur more international companies or private equity firms to press ahead with plans to acquire UK assets in a currency still cheap.”
A deal is “undoubtedly good news for investors in the UK,” Mr Buxton said.
Banking trade group UK Finance said the deal brought “much-needed certainty” and set a foundation for agreeing equivalence on regulations and enforcement that will allow the City to continue serving clients on the Continent while also embracing opportunities elsewhere in the world.
Bob Wigley, executive chairman, said: “Consumers and businesses in both the European Union and UK will benefit from maintaining open and integrated capital markets and facilitating the flow of cross-border financial services in the years ahead.”
Tony Danker, director-general of the Confederation of British Industry, said the deal will come as a relief for anxious companies after four years of wrangling with Brussels and high drama in Parliament. He added: "We can start our new chapter outside the EU on better foundations.”
Two of Britain’s leading entrepreneurs, brothers Mohsin and Zuber Issa, who were praised by Rishi Sunak for their shock acquisition of Asda earlier this year, said the deal could be a boost for their petrol forecourt empire EG Group.
They said: "There will be areas that will need to adapt, such as procurement, but we are an agile business and are used to constant change.
"With a big presence in the UK, Europe and further afield, we actually think there will be opportunities to grow EG faster.”
The Federation of Small Businesses also welcomed the deal, but warned businesses needed support including £3,000 vouchers to help them begin a new trading relationship
Helen Dickinson, chief executive of the British Retail Consortium, whose members are among the most severely affected by coronavirus restrictions, said: "After years of campaigning for zero-tariff trade, we welcome the announcement of a free-trade agreement between the UK and EU."
"Given that four-fifths of UK food imports come from the EU, today's announcement should afford households around the UK a collective sigh of relief."
David Page, head of macro research at AXA Investment Managers, described the deal as unequivocal good news for both sides but warned that the impact of leaving the EU single market should not be underestimated.
He added: "It removes the uncertainty that has affected UK business investment since the referendum result in 2016."
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