Top UK businesses’ Brexit worries ease slightly
LONDON (Reuters) – The Brexit worries of some of Britain’s biggest businesses have eased slightly over the past three months and optimism is up from a low struck after June’s unexpected election result, a survey by accountants Deloitte showed on Monday.
The poll of chief financial officers who make investment decisions at Britain’s biggest companies showed that the proportion who think Brexit will damage the business environment dropped to 60 percent from 72 percent in the previous survey.
The proportion of CFOs who think now is a good time to take on riskier ventures – for example by investing in new projects – has risen to 24 percent, three times higher than just after the June 2016 referendum.
The survey was conducted between Sept. 14 and Oct. 4, meaning most of the responses came prior to a bout of political infighting in the ruling Conservative Party and another inconclusive round of talks on the terms of Britain’s divorce from the EU.
However, the survey is still likely to cheer the Bank of England, which is predicting stronger investment growth next year as it prepares to raise interest rates for the first time since 2007 – probably as soon as next month.
The Deloitte poll’s headline gauge of business optimism also picked up after slumping following Prime Minister Theresa May’s unexpected failure to retain a parliamentary majority in an early election she called for June 2017.
“Despite Brexit uncertainties a broadening global recovery has helped lift sentiment among CFOs,” said Ian Stewart, chief economist at Deloitte.
However, the prospect of leaving the EU in March 2019 is still a big concern for businesses.
British finance minister Philip Hammond said last week that a lack of clarity about the direction of travel of Brexit talks was hurting business and consumer sentiment, and that a transition deal was needed by early 2018 at the latest.
While the world economy is going through a strong period at present, British economic growth is lagging behind its peers.
Economic consultants EY ITEM Club forecast in a report also published on Monday that growth will slow to 1.4 percent next year from 1.5 percent this year, well below historic averages of just over 2 percent.
David Sproul, a senior partner at Deloitte, said that Brexit remained firms’ top worry despite some easing over the past three months, with almost a third expecting it to curb their investment over the next three years.
“It is critical that progress is achieved soon in the negotiations between the UK and the EU to … deliver a real boost to corporate spirits and plans,” he said.
The Deloitte report is based on surveying 102 chief financial officers and group finance directors at Britain’s biggest companies, including 20 in the FTSE 100 and 40 in the FTSE 250, and similar privately held or foreign-owned firms.