In a recent article by The Telegraph, it was reported that businesses are now less worried, than they were, about Brexit. Saying that Brexit was “no longer viewed as the risk for top UK companies”. Instead it is the fear of the UK leaving the EU without a deal that appears to be the bigger worry.
A quarterly survey that was conducted by Deloitte questioned a number of Chief Financial Officers. This marked an improvement in outlook after the transition agreement with Brussels last month. Political uncertainty now appears to be sidelined by the bigger threat of a fall in demand from consumers. This finding also corresponds with other data which found weaker levels of consumer spending growth and a decrease in new orders for some firms.
The Chief Economist at Deloitte, Ian Steward, commented that there is a prominent divide between the attitudes towards the spending in the UK and internationally. Mr Stewart said: “CFOs in businesses with major international revenues report a clear focus on expansion, capital spending and moving into new markets.” Whereas “their UK-focused counterparts are operating more defensively, prioritising cost control and cash conservation.”
Another growing worry, that was highlighted in the survey, for finance managers was rising interest rates. Other worries included UK poor productivity levels, as well as the rising threat of protectionism and trade tensions between the UK and China mount.
Lastly, the survey mentioned that 20% of CFOs felt “more optimistic about the prospects for their company than they were three months ago”. This is a rise from 18%. A seemingly small 14% of CFOs felt it was a good time to take on ventures or assets that were risky. A steep fall from 20% in the previous three months. 30% expected hiring rates to slow down as a result of the UK leaving the EU, which is down from 41% in the last three months of the 2017.
Overall, the survey has showed that the impact of Brexit fears has softened across a range of business areas. It will be interesting to see deal is reached and what happens post Brexit.