Although a Brexit deal is in the works, three companies have backed out of a potential £2.9 billion buyout of mall landlord Intu due to concerns about the U.K.’s impending exit from the European Union.
But the critical response to Theresa May’s exit deal with the EU — as well as the negative repercussions if a deal is not reached by the March deadline — caused the parties to scrap the deal. As a result, Intu shares lost more than a third of their value, falling 36 percent to 124p.
“The reality is that the consortium is not in a position to make an investment decision given what is going on in U.K. politics at the moment,” said David Fischel, chief executive of Intu.
Earlier this week it was reported that European Union leaders approved a treaty outlining Brexit terms with the U.K. But the country’s Parliament still needs to vote on the deal, which has been widely criticized by Conservative Party lawmakers, as well as some members of the opposition Labour Party. And if Parliament doesn’t agree to the deal, many EU leaders have warned that better conditions won’t be offered.
Failure to reach a deal could hurt the U.K.’s economy. In fact, the Bank of England said this week that if the U.K. leaves the EU without a deal, prices of commercial property assets — including shopping centers, offices and hotels — could fall by as much as 48 percent. Even a less “disruptive” scenario would result in a 27 percent fall.
In addition, Standard & Poor predicted that a no-deal Brexit could lead the country into a long recession that could last as long as the one caused by the 2008 financial crisis.