Franchise sector generates £17.2bn to the UK economy

February 8, 2019

Franchise sector in the UK is continuing to grow according to the latest BFA/NatWest Franchise Survey.

The survey finds that the franchise sector has increased by 14 per cent in both its contribution to the UK economy of £17.2bn (2015: £15.1bn) and the number of people employed in franchising rising to 710,000 (2015: 621,000).

Additionally, there has been a healthy 10 per cent increase in the number of franchised units in the UK to 48,600 (2015: 44,200). The biggest growth areas remain personal services, hotel and catering, along with store retailing, despite a challenging environment in retail.

Franchise sector is now attracting even more younger entrepreneurs than in the last two years, with 18 per cent of all franchisees now under 30. The survey also shows a 20 per cent rise in the number of women becoming franchisees, with 37 per cent of all new franchisees in the last two years being female.

The growing area of multi-unit ownership sees 36 per cent of franchisees now owning more than one unit (2015: 29 per cent). Again the hotel and catering sector dominates with 60 per cent of franchisees owning multiple units, followed by the store retailing category with 37 per cent.

As franchise systems mature there is inevitable a higher amount of new franchisees buying a franchise resale, with 51 per cent of franchise systems expected to offer resales this year.

Pip Wilkins, chief executive of the BFA, said: “Thanks to franchising, more people are starting their own business and more jobs are being created. These figures show that whatever your background, with the right attitude and ambition you can thrive.

“The rate of female entrepreneurship is well above the national SME average, testament to the franchise community’s drive to empower women into business. We’ve come a long way since 2005, when more than 80 per cent of newcomers were male.”

‘Bridging the gap’
“And the sharp increase in under-30s starting their own business is thanks to the franchise model bridging the gap between experience and ambition. I’m delighted to see so many younger people realising they have a choice between going it alone or being employed.”

Regional economies have also benefitted from the expanding franchise sector says the survey, with economic growth since 2015 of 7 per cent in the North East (to £800m); 18 per cent in Wales (£500m); 11 per cent in Yorkshire (£1bn) and 14 per cent in the East Midlands (£1.2bn).

Related: 4 Reasons Why Franchising in the UK is Here to Stay

The data also revealed the continuation of a long-term trend that around 90 per cent of franchisees have reported profitability annually for over 20 years running, with 93 per cent profitable in 2018. Six in 10 franchised units achieved annual turnover of more than £250,000.

Those who have held a franchise for over five years and claim to be highly profitable is at a record high of 19 per cent, with only two per cent loss-making. Overall, of the businesses surveyed only three out of 198 businesses said they were loss-making.

When recruiting franchisees the main three reasons why franchisors did not grant a franchise to a candidate was insufficient capital, performance at interview, and lack of business acumen. The top three choices for franchisees selecting a franchise brand was interest in the field of business, growth potential and ‘liked the people’.

One in three UK franchisors have international operations with 22 per cent operating in Europe, four per cent in the U.S. and 15 per cent in other worldwide locations. The primary barriers for UK franchisors expanding overseas were legislation, language and lack of suitable franchisees.

With Brexit pending both franchisors and franchisees said they remain confident in their own business but less confident about the economy in general. The 31st survey, commissioned by the BFA in partnership with NatWest, can be purchased from the BFA for £95.

Source: Franchise World

Fund manager points to opportunities in UK equities

November 18, 2018

Billions of pounds have been taken out of UK equities since the Brexit referendum of June 2016 but there are still opportunities that should not be overlooked, a conference has heard.

Speaking at the Investival conference hosted by AJ Bell yesterday (November 15), Mark Barnett, head of UK equities at Invesco, said global investors had taken the view that “politics are too hot”, which overshadowed the fact the economy has not done as badly as many might have expected.

Mr Barnett said: “I have a myriad of other (investment) opportunities I’d rather be looking at elsewhere in the world, and therefore I would underweight UK equities.

“Within that category of UK equities, however, there is a subset of companies particularly exposed to the UK economy and those are the cheapest of all – I think that’s really where the opportunities are.”

Instead of UK assets, he suggests fund managers like himself have been seeking assets that offer uncorrelated returns to the economic cycle and political uncertainty.

He said: “They may be involved in things like catastrophe insurance or litigation or litigation finance or alternative lending etc.

“They’re business that may have a cycle but they sit outside of the general economic cycle, I think they offer quite big attractions for funds like ours.”

The comments came after figures released by the Investment Association in October showed investors have withdrawn £10bn from UK equity funds since the Brexit vote in June 2016.

UK equities income funds open to advisers were battered further this week by uncertainty around the current Brexit deal.

However, in reality the economy was doing “just a bit better” than was expected directly after the referendum, Mr Barnett said.

He said: “The overlay in the UK has absolutely been political – there has been evidence of the economy in aggregates since the referendum, and while it has performed a little bit worse since the referendum, it hasn’t been significantly bad.

“Actually, at the moment things are improving – the government is putting money back into the economy, it is talking about the end of austerity, and while this is mostly tinkering with the numbers effectively there is more government money coming back in, and the government stands ready to do more if they need to.”

Also speaking on the panel, James Harries, a fund manager at Troy Asset Management Limited, told delegates that “while we have been in a rising rate environment, we are not in a rising rate environment anymore”.

Nick Gartside, managing director at JP Morgan Asset Management, however disagreed.

Mr Gartside said: “Let’s be honest, central bank policy rates are just ludicrously low, they’ve set at a level that is suitable for an emergency.

“Are economies in an emergencies? No. They’re actually growing at a pretty healthy rate.

“If you look at the UK, the average Bank of England base rate since 1700 is 3.5 per cent – so can rates double from where they are now? Absolutely. And they will.”

He said the trickier economy to predict was actually Europe, which was “in a trap due to negative interest rates – a disastrous economic policy”.

Mr Gartside said: “It embeds a deflation mindset and of course they target inflation, and when you look at inflation in the eurozone, it’s at rock bottom levels.

“Probably the best you can hope for there is to go from -14 to 0.”

Mr Barnett also noted that a higher rate environment posed the risk that, because policy settings have been very low, decisions have been made by consumers and companies on that basis, and these may now have to be adjusted for a higher rate environment.

Related: 5 ways life could become harder for British people if there is a no-deal Brexit

He added: “We [also] don’t know how the US consumer is reacting already to an environment of higher rates.

“My sense is that having already had a number of rate rises as we just heard, the risk of a policy mistake is higher now than ever in the last 10 years.

“In part, because rates haven’t moved for 10 years so there’s been no change. But I do feel that – listening to what governments are saying – they are absolutely intent to keep moving rates up.”

Also speaking during the session, Ainslie McLennan, fund manager of UK property at Janus Henderson, pointed out that the market has historically operated quite well in a normal interest rate environment of between 3 to 4 per cent.

She said: “The yield on portfolios like ours is about 5 per cent. So we feel quite comfortable about it. The important element for us is that it is slow and steady, as opposed to drama.

“Commercial property often gets hit by the idea of drama more than what happens in real terms, and so we’re kind of sensitive to that. But if its slow and steady, it would be fine.”

Source: FT Adviser

UK wage growth could rise to three-year high with inflation remaining steady

November 13, 2018

UK wage growth could hit a three-year high of three per cent when data for the three months to September is revealed tomorrow, according to City economists.

Average weekly earnings could reach the three per cent UK wage growth mark – from 2.7 per cent in the previous quarter – while excluding bonuses it could rise 3.2 per cent, up from 3.1 per cent in the three months to August, economists have predicted.

Inflation is expected to remain steady at 2.4 per cent after an unexpected dip in September.

David Madden, analyst at CMC Markets, said it would give the economy a welcome boost and point towards a tightening of monetary policy.

He said: “Rising wage growth and falling inflation is a double win for the British worker, and equates to a ‘real’ increase in wages.

“When workers earn more they tend to spend more, and this should help the British economy tick along.”

Daiwa Capital Markets predicted the three-year high, as did Capital Daily economists.

Both also expected the unemployment rate to remain at the multi-decade low of four per cent.

Related: What impact is Brexit uncertainty having on the UK economy?

Daiwa’s research said: “This report is likely to show that the period of subdued employment growth continued.

“The headline three month pace dropped to around zero in the last two months, and while we will probably see somewhat higher reading for September, it should be far from the triple-digit increases often seen in the first half of the year.

“The weaker employment growth should leave the headline unemployment rate unchanged at 4 per cent.”

Source: City A.M.

UK economy grows at fastest tick in nearly 2 years

November 11, 2018

Official figures show that the UK economy grew in the third quarter of the year at its fastest pace for nearly two years.

The Office for National Statistics said Friday that the economy expanded by a quarterly rate of 0.6 percent in the July to September period. That’s up from the previous quarter’s 0.4 percent and the highest recorded since the fourth quarter of 2016, just after the country voted to leave the European Union.

The statistics agency said the hot summer weather helped boost consumer spending, particularly of food and drink.

Related: What impact is Brexit uncertainty having on the UK economy?

The high growth figure for the July-September quarter means UK economy grew faster than the 0.2 percent quarterly tick recorded by the 19-country eurozone during the period.

Source: Business Insider UK

Business confidence hits lowest level since the financial crisis

November 6, 2018

Business confidence in UK has fallen to its lowest level since 2008 amid a lack of progress in Brexit negotiations, according to new figures published today.

The Institute of Chartered Accountants in England and Wales’ (ICAEW’s) Business Confidence Monitor index showed a sharp fall in confidence since last quarter from -0.2 to -12.3, lower than after both the 2016 referendum and last year’s general election.

The accountancy institute blamed a lack of progress in Brexit negotiations as one likely reason for the decline, with the figures falling sharply after Theresa May’s Chequers plan was rejected by EU leaders at the Salzburg summit in September.

FTSE 350 companies have a more negative outlook than privately-owned businesses, according to the index, though the decline in confidence is widespread across most sectors and all regions.

Last week chancellor Philip Hammond unveiled his Budget by announcing the era of austerity is “finally coming to an end”, but also set aside a total of £2bn in the event of a no-deal Brexit.

Related: 5 ways life could become harder for British people if there is a no-deal Brexit

The survey of 1,000 chartered accountants revealed 42 per cent of businesses were less confident about their economic prospects over the next year, compared with 31 per cent last quarter. Only 22 per cent said they were more confident, compared to 33 per cent the previous quarter.

Despite this, growth in general sales volumes is still roughly four per cent and is expected to remain at this level over the next 12 months.

A closely followed index out today shows that the UK services industry saw its slowest growth since March. The purchasing managers’ index, compiled by IHS Markit and the Chartered Institute of Procurement & Supply, was down to 52.2 in October from 53.9 in September.

Sharron Gunn, ICAEW executive director, said: “Business confidence is at its lowest point since the financial crisis ten years ago. Leaving the EU and its potential impact is at the front of everyone’s minds.

“This is a difficult time to run a business, let alone finance the major investments the UK economy will desperately need post-Brexit to drive growth. The Budget offered some relief to business but more significant action is needed by government to provide stability and reassurance.”

A government minister today said the UK and EU are close to striking an agreement on financial services access post-Brexit, while Brexit secretary Dominic Raab has claimed a deal is possible by 21 November.

Source: City A.M.

Carney says this is as good as it gets for growth

November 3, 2018

The current rate of growth is as good as it gets for UK consumers, Mark Carney has said.

Mark Carney, the governor of the Bank of England was speaking after the central bank decided to leave interest rates unchanged at 0.75 per cent.

Mr Carney said the UK economy was “probably growing about as fast as it has capacity to without pushing up prices quickly”.

In fact the Bank of England cut its forecast for UK growth by 0.1 per cent for this year and next.

The definition of how fast an economy can grow without a sharp rise in inflation is called the trend rate of growth.

An economy can grow much faster than the trend rate in the short term but this leads to higher inflation, which typically provokes the central bank to raise interest rates quickly, which tends to reduce economic growth.

An economy growing at markedly above or below the trend rate of growth does so because of government or central bank policy, before reverting to the trend over time.

The Bank of England’s assessment was made before the Budget of 29 October, in which Chancellor of the Exchequer Philip Hammond unveiled tax cuts and increased public spending, initiatives which both Mr Hammond and his Labour Party counterpart John McDonnell said would stimulate growth in the short term.

Andy Haldane, the Bank of England’s chief economist has said the UK leaving the European Union was likely to reduce the long-term trend rate of growth to 1.5 per cent, down from the previous level of 2 per cent.

Mr Haldane’s view was that the trend rate of growth in the economy was determined largely by the size and productivity of the working age population.

Related: What impact is Brexit uncertainty having on the UK economy?

He said migration into the UK was likely to fall after Brexit, reducing the size of the working age population and so reducing the trend rate of growth. He said migrant workers were, in aggregate, more productive than native workers so a reduction in migration would also reduce the trend rate of growth.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the uncertainty around the outcome of the Brexit negotiations meant the Bank of England had little choice but to leave interest rates unchanged.

He said the central bank painted a “dreary” picture of the long-term growth potential for the UK economy which indicated interest rates would remain low relative to history for the long term.

In the quarterly inflation report, released alongside the interest rate decision, the Bank of England said it expected to put interest rates up in the next 12 months if the economy continued on its current trajectory, but also said it may have to put interest rates up in the event of a disorderly Brexit, even if economic growth has slowed dramatically, to prevent sterling collapsing in value and delivering an inflation shock to the economy.

David Cheetham, chief market analyst at XTB, said the market reaction to the news was muted because various aspects of the Bank of England’s communication were “mixed”.

Paul Stocks, financial services director at Dobson and Hodge, said Brexit was one of many issues facing investors now, but he was trying to invest on behalf of clients for a longer term time frame.

He said he tended to have more global funds in his clients portfolios than UK ones due to a wave of issues.

Bill Casey, a UK equity fund manager at Schroders, said he was investing more in UK companies that have defensive characteristics.

Source: FT Adviser

Budget 2018: Philip Hammond has ‘backed himself into a corner’ if Brexit hits UK economy, says IFS

November 1, 2018

Philip Hammond will find himself stuck in “a corner” if Brexit goes badly after he announced a spending splurge in his set-piece Budget, a think tank has warned.

The Institute for Fiscal Studies said the Chancellor had taken “a gamble” by splashing better-than-expected tax takes on the NHS, roads and the armed forces, among other things.

It said Mr Hammond will have to choose between a return to austerity, big tax rises or greater borrowing if Brexit deals a blow to the British economy.

The Chancellor declared to the Commons that austerity was “finally coming to an end” as he pumped much of a £78bn fiscal windfall into a multitude of giveaways at the Budget yesterday.

According to the IFS, Mr Hammond got “lucky” with improved tax takes despite sluggish growth, and decided to splash the cash rather than use it to pay down the deficit.

At a post-Budget briefing today, IFS director Paul Johnson warned that there were “huge amounts of uncertainty” in the improved financial forecasts, “not least given Brexit”.

“What the Office for Budget Responsiblity gives this year it can quite easily take away next year,” he explained.

“If forecast borrowing goes up I think the Chancellor has painted himself into a bit of a corner.

“He is going to struggle to impose austerity having announced its end – but could he resort to sizeable tax rises given his lack of majority? I doubt it. More likely he’ll allow borrowing to persist at a higher level.”

He added: “When push comes to shove it’s not tax rises and it’s not the NHS that Mr Hammond is willing to gamble on, it’s the public finances. Because yesterday’s Budget was a bit of a gamble.”

Related: Chancellor says no deal Brexit will damage UK GDP for years to come

Mr Hammond had said at the weekend that failure to secure a Brexit deal could force him to change his spending plans – but he was slapped down by No 10.

The IFS said it was unable to determine whether austerity had actually ended – as Theresa May claimed in her party conference speech earlier this month – since overall spend was up but some departments are still set for cuts.

It added that some £4bn in welfare cuts were yet to come into force – despite the Chancellor handing extra cash to the under-fire Universal Credit system yesterday.

And it said Mr Hammond could have paid down the deficit by 2023, as promised in the Tory manifesto, if he had banked the extra windfall instead of spent it.

“Any idea that there is a serious desire to eliminate the deficit by the mid-2020s is surely for the birds,” Mr Johnson said.

‘AUSTERITY COMING TO AN END’

Responding to the IFS, Chief Secretary to the Treasury Liz Truss said: “This Budget showed how the hard work of the British people is paying off, with our balanced approach providing a solid economic recovery which means austerity is coming to an end.”

She said the Government was “providing more support to public services” and “investing for the long-term” but was “also clear that discipline remains”.

Labour leader Jeremy Corbyn had blasted what he branded the “broken promise Budget” as he insisted austerity was still going strong.

It came after another think tank – the Resolution Foundation – said tax changes in the Budget handed a big boost to the richest members of society.

Source: Politics Home

UK budget and Bank of England take back seat to Brexit drama

October 28, 2018

UK budget announcement on Monday and a “Super Thursday” at the Bank of England would normally be key moments for the world’s fifth-biggest economy, but this time they are likely to be overshadowed by the drama of Brexit.

Finance minister Philip Hammond and Bank of England Governor Mark Carney have little option but to sit on the fence as they wait to see whether a no-deal exit from the European Union, which they warn would harm the economy, can be averted.

Both men have other business they want to get on with.

Hammond is under pressure from Prime Minister Theresa May to end a decade of austerity to see off a rise in popularity of the opposition Labour Party.

At the BoE — where an interest rate decision and economic forecasts are due to be announced on Thursday — Carney and his fellow policymakers want to progress with their plan to raise borrowing costs gradually over the coming years.

That would allow the British central bank to follow the lead of other central banks, especially in the United States and Canada, which are dismantling 10 years of massive stimulus.

Expectations of another rate hike by the U.S. Federal Reserve in December are likely to grow if the monthly payrolls report on Nov. 2 shows further jobs growth and rising pay.

In the euro zone, data on economic growth and inflation on Tuesday and Wednesday will show whether the recovery in the single currency area has kept pace.

But in Britain, with Brexit just five months away, things are much less clear cut.

BREXIT FOG

There is no sign of a Brexit breakthrough with Brussels, in large part because May’s Conservative Party is riven over how close Britain should remain to the European Union after it leaves the bloc.

“UK budget is likely to be something of a holding exercise until the Brexit fog clears and the MPC is likely to remain in a state of inertia until there is a bit more clarity on the state of the Brexit negotiations,” Ruth Gregory, an economist with Capital Economics, a research firm, said.

When he stands up in parliament on Monday afternoon, Hammond is expected to use his high-profile UK budget speech to try to cool the Conservative rebels by dangling the prospect of higher spending in the future, as long as a Brexit deal is done.

Britain’s economy has slowed since the 2016 referendum decision to leave the EU. But it has not suffered as badly as many forecasters expected, giving Hammond some fiscal wiggle room to fund higher health spending already promised by May.

Hammond might get further help if UK budget forecasters scale back their estimates of future deficits, as they have suggested they will.

But his ability to ramp up spending in other areas depends most on avoiding a new shock to the economy.

A no-deal Brexit would slash economic growth to just 0.3 percent a year in 2019 and 2020 compared with 1.9 and 1.6 percent if there is a deal, the National Institute of Economic and Social Research estimated on Friday.

UK budget deficit would stop falling and would rise under a no-deal scenario, according to its forecasts.

Looking further ahead, Hammond has suggested he will need to raise taxes to help fund higher public spending.

SIGNS OF PAY “NEW DAWN”

But the prospect of getting controversial measures passed in parliament, where the Conservatives have no outright majority, is probably too daunting at a time of heightened Brexit tensions.

For the BoE, the Brexit stakes are high too.

It has begun raising interest rates from their crisis-era levels and its chief economist has said he sees signs of a “new dawn” for British workers’ pay, long the missing link in the country’s recovery from the financial crisis.

Related: Chancellor says no deal Brexit will damage UK GDP for years to come

But most economists think it will wait until May to raise rates again, assuming Britain leaves the EU with a deal.

“In any other situation, we suspect the Bank of England would be looking to increase interest rates pretty soon,” ING economists said in a note to clients on Friday.

“But inevitably, Brexit remains policymakers’ number one consideration, and given that there may still be some time before we know for sure whether a deal will be in place before the UK formally leaves the EU, there is a risk growth slows as businesses and consumers grow more cautious.”

Source: UK Reuters

UK economy saves £51m a year through food waste redistribution

October 27, 2018

Collecting and redistributing food that would otherwise go to waste saves the UK economy around £51 million a year, according to a new report from food waste charity FareShare.

The Wasted Opportunity Report, carried out by NEF consulting, evaluates the economic and social value of redistributed surplus food, as well as the current and potential cost avoided by the UK public sector as a result of the charity’s work.

If found that by collecting food that would otherwise go to waste and redistributing it to charity and community groups, FareShare creates approximately £50.9 million of social-economic impact each year.

This is made up of £6.9 million in social value to the beneficiaries themselves and £44 million in saving to the State (in savings to the NHS, the criminal justice system, to schools and in social care).

The implication is that, were FareShare and other charities in the food redistribution sector able to scale up their operational capacity to handle 50% of the surplus food available in the UK supply chain, the value back to the State could be as much as £500 million per year.

FareShare redistributes good quality surplus food from the UK supply chain and delivers it to nearly 10,000 charities and community groups – including homeless hostels, children’s breakfast clubs, domestic violence refuges and community cafes.

In its Annual Report, the charity announced that in 2017-2018 it redistributed 17,000 tonnes of in date, good to eat surplus food — enough to create almost 37 million meals.

This surplus food is worth £30 million per year in cash savings to the charitable sector and means charities can spend more delivering their frontline services.

The report follows the announcement by Michael Gove, SoS for Environment, Food and Rural Affairs for a £15 million pilot project that aims to make it as cost-effective for the food industry to redistribute their surplus to charities as it is for them to dispose of it as waste.

The charity is also launching a new campaign, ‘Good Food Does Good’, to encourage more businesses to do the right thing with their surplus by demonstrating the difference the food makes to the charities and individuals who receive it.

Source: Food&Drink International

Brexit uncertainty set to hobble UK economy through winter

October 21, 2018

The uncertainty over Brexit that’s hobbling the British economy is set to go on for longer than expected, leaving companies and households in a limbo.

When Britain triggered the two-year timetable to leave the European Union, October’s summit of EU leaders was supposed to be the moment a Brexit deal would be agreed on to give parliaments the time to pass it into law ahead of March’s departure.

A deal at Wednesday’s summit would have lifted some of the pall that’s hung over the British economy since the Brexit vote of June 2016. Instead, British Prime Minister Theresa May wasn’t able to secure an agreement and EU leaders cancelled a Brexit summit in November. That suggests there won’t be any deal until December — at the earliest. Even if May does secure one, there is no certainty she can get it approved by her own, divided parliament.

The worry is Britain could crash out without a pact on future relations with the EU or without even a transition period to ease its exit — what has become known as a “hard Brexit.” Tariffs would be placed on exports, border checks would be reinstalled, and restrictions could hit travelers and workers. Some are warning of shortages in markets like medicines and even sperm donations.

“For the economy, this could see growth momentum slow again over the winter as uncertainty rises,” said James Smith, developed markets economist at ING. “With businesses becoming more vocal about the impact ‘no deal’ would have on operations, households may begin to take a more cautious stance if they gradually become more wary about their job security.”

Related: 5 ways life could become harder for British people if there is a no-deal Brexit

Consumers have become cautious, cutting down on spending as a fall in the pound after the Brexit vote pushed up prices for imports. The housing market has cooled, particularly in parts of London. And companies have become more hesitant to invest. From being the fastest-growing Group of Seven industrial economy prior to the Brexit vote, Britain is now one of the slowest.

According to the International Monetary Fund, U.K. growth this year is expected to be a muted 1.4 percent. After Wednesday’s summit, the risk is it could be even lower if firms become more cautious.

“Business’ patience was already threadbare and is nearing an end,” said Carolyn Fairbairn, director-general of the Confederation of British Industry, a lobby group that represents mainly big firms.

British businesses are particularly open to foreign markets, investing heavily abroad, hiring foreigners and exporting to other markets, particularly the EU, the biggest destination for British goods.

Research published Thursday by the British Chambers of Commerce and DHL Express U.K. showed the extent to which Brexit is making life difficult for firms.

In a survey of 2,530 small and medium-sized companies conducted in August, the BCC found that 49 percent of firms have Brexit “front of mind” when deciding whether to trade internationally and that highlights “the economic cost of the persistent lack of political clarity.” A similar number are also concerned about the pound’s volatility — the currency fell sharply after the Brexit vote and it has continued to swing sharply.

“Firms have been dealing with uncertainty over the future relationship with the EU since the referendum vote over two years ago,” said BCC director-general Adam Marshall. “This survey shows that, as we get closer to the crunch, the lack of precision is starting to have a material impact on their decision-making.”

If and when a deal is struck, the detail will have a big impact on business decisions.

Any deal that sees Britain remain closely aligned to the EU’s regulations may mean firms won’t be able to tap other markets around the world, as Britain could be bound by EU trade deals and regulations.

Some prominent Brexit proponents — including James Dyson, the founder of the eponymous vacuum cleaner, and Tim Martin, the chairman of pub chain Weatherspoon’s — say Britain should agree on only loose ties with the EU to have the freedom to make new trade deals.

Some big companies are becoming increasingly vexed by the impasse. This week, ahead of the summit in Brussels, pharmaceuticals giant AstraZeneca and carmaker Ford issued statements raising doubts about their investments in Britain.

They’re worried about supply chains being clogged up, and about their ability to use Britain as a base to access the rest of the European Union. Steven Armstrong, Ford’s group vice president, said a so-called “hard Brexit” is a “red line” for his company.

“It could severely damage the U.K.’s competitiveness and result in a significant threat to much of the auto industry, including our own U.K. manufacturing operations,” he said.

“We will take whatever action is necessary to protect our business in the event of a hard Brexit.”

Source: Business Insider UK