Investment and uncertainty: the value of waiting for news Speech given by Ben Broadbent, Deputy Governor Monetary Policy Imperial College Business School, London 20 May 2019  I’ve received helpful comments from colleagues at the Bank of England. I’d particularly like to thank Mette Nielsen for her help in preparing the speech. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Financial Policy Committee or the Monetary Policy Committee. 1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Good evening! Today I want to talk about “Brexit uncertainty” and investment. This is hardly a new topic. Indeed I put the words in quotes because the phrase has become so commonplace. At least in the context of the economy one rarely hears one without the other attached to it. There are good reasons for that, of course. We know from general experience – from the empirical evidence in the UK and elsewhere (Chart 1) – that greater uncertainty tends to reduce investment spending. It’s also clear, from direct conversation and from more formal surveys, that many businesses are apprehensive about Brexit. Over half of the respondents to the Bank’s Decision Maker Panel, a survey of over 7,000 firms, now count Brexit as one of their three most important sources of risk (Chart 2).1 According to a survey by the Bank’s Agents the outcome they think will have the most negative economic impact is a no-deal exit with no agreed transition period.

This is not surprising news, given that major global players in the industry such as HSBC, Standard Chartered and Citibank have established SSO centres on our shores. Regional players such as Maybank, CIMB and OCBC have also outsourced certain operations here to increase their productivity levels. We are happy to have them here today to share their experiences and perspectives. It would not be presumptuous of me to say that the financial institutions in Malaysia are in an enviable position where SSO is concerned in view of Malaysia's standing as a leading destination for the establishment of SSO hubs. A.T. Kearney ranked Malaysia as the third most attractive outsourcing centre in their Global Services Location Index in three consecutive reports, including this year's index. The report states that Malaysia was a "natural choice" for outsourcing in view of its low costs, modern infrastructure, business environment and high levels of global integration. Frost & Sullivan ranked Malaysia as the fifth most attractive SSO location in 2007 whereby the finance sector was identified as one of Malaysia's niche areas, ranking fourth in this sector. Key strengths that they pointed out include infrastructure quality, favourable Government policies, political stability and cultural adaptability of skilled workforce. Indeed, the Multimedia Development Corporation has implemented various initiatives in developing the Multimedia Super Corridor or MSC Malaysia as a conducive and attractive environment for outsourcing activities. Leveraging on these competitive advantages of Malaysia would seem to be a natural progression for financial players who are looking to stay ahead of the game.