Brexit has been blamed by a senior economist for companies leaving London and heading to New York. Simon French, Head of Research and Panmure Gordon, said valuations of the UK stock market had declined since 2016 when Britain voted to leave the European Union.
The economist claimed that Brexit has been a “big contributing factor” in the exodus of companies from London.
Flutter Entertainment – the owner of betting firm Paddy Power – is said to be consulting shareholders over a listing on the New York Stock Exchange.
Chip maker Arm and building materials firm CRH, which together have a market value of £80billion, have already announced plans to float in the US instead of London, which comes as a major knock to the UK global finance reputation.
While Mr French admitted that other factors also came into play, he said Brexit’s impact should not be overlooked.
Speaking to BBC Radio 4’s Today Programme, he said: “Some of it is compositional, some of it is the fact that there are more higher growth businesses in the United States markets.
“The depth of liquidity in the UK is much lower than it is in the United States.
“But we have to mention the B word. Brexit has been a big contributing factor here.
“This discount did not exist in 2016.
“And since then, valuations have moved lower in the United Kingdom, while they’ve moved higher in both the US most obviously, but also in Europe.”
However, a survey conducted by Deloitte was published on Monday, which showed increasing confidence in the UK economic landscape among finance chiefs.
Chief financial officers of top UK companies recorded a net positive 25 percent confidence rating in the first quarter of 2023.
That number is a major increase from negative 17 percent which was recorded just three months ago.
Deloitte spoke to 64 chief financial officers, 11 of which are in charge of the finances of FTSE 100 companies.
Ian Stewart, chief economist at Deloitte, said: “The economic unpredictability that marked the beginning of 2023 has started to clear, with CFOs reporting the largest decline in perceptions of uncertainty to date.
“Business confidence has rebounded, helped by a decrease in energy prices, an easing of Brexit concerns and an improving inflation backdrop.”
He added: “Since the beginning of the year, energy prices have fallen, inflation looks to have peaked, relations with the EU have improved since the Windsor framework and there has been a period of comparative political calm after the turmoil of last year.”
