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Brexit meltdown? UK car investment tumbles but consumers resilient

Car makers see no deal as the worst possible option, the country’s leading automotive lobby group said, while in the wider manufacturing segment a survey from the Confederation of British Industry said optimism among smaller British companies had tumbled to a three-year low in July.
Yet an indicator of consumer confidence from market researcher GfK rose unexpectedly in July, while top executives from fashion retailer Next (NXT.L) and banking group Lloyds (LLOY.L) both said they had seen no negative Brexit impact on consumers so far.
Britain’s new prime minister Boris Johnson has repeatedly cautioned that if the EU refuses to renegotiate the Brexit divorce deal agreed by his predecessor Theresa May he will lead Britain out on Oct. 31 without a deal.
Sterling has fallen more than three cents since Johnson was named as prime minister just over a week ago. Many investors say a no-deal Brexit would send shock waves through the world economy and tip Britain’s economy into a recession.
In an indication of the hit from more than three years of Brexit-related political crisis, investment in Britain’s car sector fell more than 70 percent in the first half of the year, the Society of Motor Manufacturers and Traders (SMMT) said.
“The fear of no-deal is causing investors to sit on their hands,” said Chief Executive Mike Hawes. “The worst outcome would be no-deal. That’s what they fear, that is why they’re not investing.”
Britain’s overwhelmingly foreign-owned car industry was rebuilt from the 1980s by the likes of Japan’s Nissan (7201.T), Toyota (7203.T) and Honda (7267.T), which were encouraged by former Prime Minister Margaret Thatcher to use the country as a launch pad into Europe.
The SMMT said investment had fallen to 90 million pounds ($110 million) in the first half of 2019, against 347.3 million in the same period in 2018 and 647.4 million a year before.
POSSIBLE DELAYS
Car makers have also spent at least 330 million pounds on Brexit contingencies such as securing warehousing space and stockpiling parts in order to mitigate the impact of possible delays to the movement of models and components at ports.
Supporters of a decisive Brexit say that while there could be some short-term difficulties, the disruption of a no-deal Brexit has been overplayed and that in the long term the United Kingdom would thrive if it left the EU.
Leaving the EU was once far-fetched: Just two decades ago, British leaders were arguing about when to join the euro. Now, British government policy is to leave, “do or die” in Johnson’s words, on Oct. 31.
If it leaves without a deal, Britain would quit the EU’s 500 million-strong single market and customs union overnight, falling back on World Trade Organisation rules that could mean many import and export tariffs. There would be no transition.
Three years of political squabbling over Brexit has left allies and investors puzzled by a country that for decades seemed a confident pillar of Western economic and political stability.
That has made investment in the United Kingdom a hard sell in boardrooms from Tokyo to New York.
Still, full-year auto investment, based on new publicly announced decisions on fresh spending, will be boosted by a roughly 1 billion pound move by Jaguar Land Rover (part of Tata Motors (TAMO.NS)) to make electric cars in Britain.
And the British consumer is relatively buoyant, according to Next, whose CEO Simon Wolfson said he had seen no evidence of spending being hit by worries over Brexit.
“The encouraging thing is the government is now seriously preparing for no deal,” Wolfson, a Conservative member of Britain’s upper house of parliament, told Reuters.
“If the country is well prepared and we still have free flow of goods through our ports ... then I can’t see any reason why there should be any major impact on the consumer,” Wolfson said.
Banking group Lloyds (LLOY.L) also said it had seen little impact on consumers so far.
GfK’s indicator of consumer confidence rose unexpectedly in July to -11 from -13 in June, beating forecasts in a Reuters poll but broadly in line with its range this year.
“Consumers have generally been less affected by Brexit uncertainties than business,” GfK executive Joe Staton said. “However, the coming months to the Oct. 31 departure date will test the strength of this confidence.”
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BENEFIT Sponsors BuildHer...
- April 23, 2025
BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, has sponsored the BuildHer CityHack 2025 Hackathon, a two-day event spearheaded by the College of Engineering and Technology at the Royal University for Women (RUW).
Aimed at secondary school students, the event brought together a distinguished group of academic professionals and technology experts to mentor and inspire young participants.
More than 100 high school students from across the Kingdom of Bahrain took part in the hackathon, which featured an intensive programme of training workshops and hands-on sessions. These activities were tailored to enhance participants’ critical thinking, collaborative problem-solving, and team-building capabilities, while also encouraging the development of practical and sustainable solutions to contemporary challenges using modern technological tools.
BENEFIT’s Chief Executive Mr. Abdulwahed AlJanahi, commented: “Our support for this educational hackathon reflects our long-term strategic vision to nurture the talents of emerging national youth and empower the next generation of accomplished female leaders in technology. By fostering creativity and innovation, we aim to contribute meaningfully to Bahrain’s comprehensive development goals and align with the aspirations outlined in the Kingdom’s Vision 2030—an ambition in which BENEFIT plays a central role.”
Professor Riyadh Yousif Hamzah, President of the Royal University for Women, commented: “This initiative reflects our commitment to advancing women in STEM fields. We're cultivating a generation of creative, solution-driven female leaders who will drive national development. Our partnership with BENEFIT exemplifies the powerful synergy between academia and private sector in supporting educational innovation.”
Hanan Abdulla Hasan, Senior Manager, PR & Communication at BENEFIT, said: “We are honoured to collaborate with RUW in supporting this remarkable technology-focused event. It highlights our commitment to social responsibility, and our ongoing efforts to enhance the digital and innovation capabilities of young Bahraini women and foster their ability to harness technological tools in the service of a smarter, more sustainable future.”
For his part, Dr. Humam ElAgha, Acting Dean of the College of Engineering and Technology at the University, said: “BuildHer CityHack 2025 embodies our hands-on approach to education. By tackling real-world problems through creative thinking and sustainable solutions, we're preparing women to thrive in the knowledge economy – a cornerstone of the University's vision.”
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