ALL SIGNALS are pointing to recession in the UK. Big-ticket spending by both companies and households is weak, retail spending in general seems gloomy too. Consumer confidence is at its lowest ebb in more than five years and house prices have stagnated as a result.

It’s a bad time for business certainty to be hovering somewhere around zero. There is simply no saying what rules UK companies will have to play by to trade with the continent, so they are understandably cautious and reluctant to invest. Stock inventories are piling up as businesses try to make sure they are prepared for at least a few weeks in case Britain crashes out of the single market with no back-up plan.

This build-up in stock is essentially cash that now has to sit in a warehouse for a few months or more gathering dust; it’s money that could have gone to much better use elsewhere. It’s a perfect parable for why the Brexit purgatory is almost worse than any poor final decision will be. Money is being wasted or withheld everywhere, whether it’s Whitehall paying people to plan the transformation of motorways into carparks, businesses investing in countries with fewer tectonic changes ahead of them or Joan Bloggs holding off on moving or making large purchases “till the Brexit thing blows over”.

Because much of the issue with the UK is a reluctance to spend and invest, there’s a chance that a locked-in deal and signposted pathway to a new relationship will overcome these reservations and boost the economy and sterling. But at the time of writing the chance of that seemed slim to us. Any deal that does come seems destined to be delayed, disappointing and shy on the details. Instead, the Brexit purgatory seems set to continue, which will slowly strangle the economy. A recession looks ever more likely as one month rolls into the next.

For that reason, we have been steering clear of UK-focused investments in our multi-asset portfolio funds. That doesn’t mean we have put a red line through all companies that are based here. In fact, we hold shares in FTSE 100 ETFs - passive funds that follow the UK’s blue-chip index - because most large FTSE companies make most of their money overseas. That means they benefit when the sterling exchange rate falls because each overseas sale is worth more when you bring it back to HQ.

And if sterling rises – say if a surprise compromise deal passes Parliament – we believe that the negative side of this exchange rate effect will be dulled by a wave of foreign investors returning to the UK. Despite a higher pound making overseas earnings less valuable, we believe foreign buyers will simply buy the FTSE 100 as a nice easy way of reallocating to UK markets, even though that’s irrational.

It’s impossible to know how many projects were shelved following the 2016 Brexit vote, how many UK firms hunkered down and how many foreign ones established factories or offices in Krakow rather than the Home Counties. That said, the sheer drop in investment tells you that ‘Project Fear’ wasn’t all hot air, but the time scale was way off. The warnings seemed overblown by many, but the trend is indeed heading in the direction the experts predicted. You would expect the effect to be tapered because of the inertia of finishing plans that are already in motion so, two and a half years on, it’s no surprise that the UK appears to be running out of steam as confused stasis continues.

We have been focusing our efforts on finding businesses that are growing steadily for strong underlying reasons rather than simply GDP growth or spending by already-leveraged consumers - companies that benefit from the move to digital payments over cash, e-commerce’s greater share of total spending or crucial business services that save its customers money. We find these companies all over the world, but overwhelmingly they tend to be American, which is why a substantial portion of our portfolio is there.

David Coombs is a fund manager at Rathbones.