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Will Northern Ireland deal boost investment in UK?

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The deal on the Northern Ireland protocol will help “significantly revive” business investment into the UK from global investors, said the CEO and founder of a leading independent financial advisory and fintech.

The bullish observation from deVere Group chief executive Nigel Green comes as Prime Minister Rishi Sunak unveiled a Brexit deal with the EU on Monday that aims to overhaul Northern Ireland’s post-Brexit trading arrangements.

The deal brings a bitter dispute between the two sides to an end, restores devolved government in Belfast, and eases concerns from the US about the Northern Ireland situation.

“Since the 2016 Brexit referendum, and the intense political wranglings it has caused, business investment into the UK from global investors has faltered,” said the deVere CEO.

“The possibility of an all-out trade war between the UK and the EU, plus the multifaceted political fallout, has triggered major uncertainty – which investors avoided due to the risks involved. Companies are never going to heavily invest where there are high levels of uncertainty.

“This deal will help unleash business investment that has been held back by global investors.”

Losses and slowdown

Brexit has been the direct cause of £29 bln in business investment being lost and fuelled the slowdown in productivity, according to a Bank of England interest rate setter.

Jonathan Haskel noted the lack of business investment growth since the Brexit referendum was equivalent to 1.3% of UK gross domestic product (GDP).

“The deal announced on Monday settles the dispute that has been raging since 2021 when the UK left the EU single market and customs union through changes to the workings of the Northern Ireland protocol, which was part of the Brexit agreement signed by Boris Johnson back in 2019,” said Green.

“We expect this new development will help significantly revive business investment into the UK from global investors.”

The deVere CEO also noted that the British pound is likely to be given a much-needed bounce now a political agreement between the UK and the EU on the Northern Ireland protocol has been reached.

“We expect the pound will enjoy a bounce amid hopes for improved trading relations between the UK and the EU, which bolsters investor sentiment on Britain’s economic outlook.”

Since Brexit, the pound has been out of favour with FX traders, with the UK currency falling nearly 18% against a basket of currencies since the referendum.

It has also been dragged down in recent months by fears over slowing economic growth and multi-decades high inflation.

“We could now be heading past peak pound pessimism,” Green said.

“Investors need certainty to invest. This deal on the Northern Ireland protocol helps bring that back,” he concluded.