The slowdown in dealmaking activity is poised to continue until June.
As Europe holds its breath over whether or not the U.K. will stay in the union, companies are holding on to their cash.
Bloomberg News reports that coming off of an eight-year record for mergers and acquisitions, the U.K. just had its worst quarter for deals since 2010, according to data compiled by Bloomberg. First-quarter M&A spending on and by companies in the country is down 39% from a year ago.
Blame Brexit. Critics have warned that the loss of trade and immigration agreements could cause economic instability and push some businesses out of the country. With its large banking hub in London, the U.K. has been in many respects the financial capital of the European Union. The slowdown in dealmaking activity is poised to continue until June when Britons will vote to stay or quit the bloc.
“Brexit is having a negative impact on deals, especially those with a cross-border angle,” Stefan Brunnschweiler, Zurich-based partner and head of corporate M&A at law firm CMS, said in a phone interview. “We have seen a number of companies and investors who have postponed their investment decisions until after the vote takes place.”
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