HUTHWAITE, England: As uncertainty over Brexit spills into its fourth year, Swiftool Precision Engineering has taken a tough investment decision: It will press ahead with a plan to spend £50,000 ($323,000) on a 3D printer but a new workshop roof will have to wait.
Like many British companies, the small, family-owned firm which makes parts for aircraft engines and offshore oil wells wants more clarity on what leaving the EU might mean for its business before carrying out all its investment plans.
“You become more mindful,” Director Sam Handley said at the company’s workshops, near Mansfield in central England, where it employs 126 people.
Swiftool (SPE) is not alone in being cautious.
British business investment has fallen 1.1 percent since the Brexit referendum in June 2016 and analysts warn that could cause long-term damage to the economy.
Over the same period, business investment in the other Group of Seven big, industrialized economies has risen 10 percent, with the US posting an increase of 13 percent, according to Alpesh Paleja, an economist with the Confederation of British Industry.
“With every piece of machinery we have to convince the bank that we are doing the right thing. Every decision counts,” Handley said.
British Prime Minister Boris Johnson is urging voters to end the Brexit impasse by giving him a majority in Parliament in an election on Dec. 12, so he can get the divorce deal he struck with Brussels last month past lawmakers.
Weak business confidence is not just a British phenomenon. The International Monetary Fund says Sino-US trade tensions are hurting investment globally. But Brexit uncertainty threatens to turn the British problem into a crisis.
Bank of England Deputy Gov. Dave Ramsden said last month that weak investment has eaten away at Britain’s growth potential to the extent that the economy is now too inflation-prone to allow the central bank to cut interest rates.
The car sector — which is grappling with the prospect of high EU tariffs on top of global upheaval in the auto industry — cut investment by more than 70 percent in the first half of 2019, according to an industry group.
European planemaker Airbus, meanwhile, warned this year it might stop building aircraft wings in Britain if the country leaves the EU without a withdrawal agreement.
Warning signs about Britain’s diminishing growth potential are flashing in its productivity record.
It has long lagged the performance of the US, France and Germany and in the three months from April, British output per hour fell at its fastest annual pace in five years.
Paul Mizen, an economics professor at the University of Nottingham, said a survey of companies set up in 2016 by his university along with Stanford University and Britain’s central bank did not bode well for productivity going forward.
“Investment growth has been affected to the greatest extent among the most productive firms, which indicates that the productivity average for the UK as a whole will be lower.”
Mizen said the Decision Maker Panel survey also showed that constantly changing Brexit scenarios were distracting companies from focusing on boosting productivity.
Johnson says things could improve quickly. Getting his Brexit deal through Parliament would “unleash a great tide of investment into this country and be a demonstration of confidence in the UK economy”, he told lawmakers in October.
Johnson has left open the possibility of diverging from EU standards in sectors such as aviation to help Britain secure post-Brexit trade deals with the US and others.
Having to comply with different sets of rules would mean additional costs for British manufacturers that could erode their competitiveness.