Fears for UK economy
Nearly half of finance chiefs think country faces decline after Brexit
NEARLY half of finance chiefs now expect the UK economy to decline, following the Brexit vote, and investment and jobs are in jeopardy, a survey by the Institute of Chartered Accountants of Scotland (ICAS) has revealed.
The survey of finance chiefs working throughout the UK shows 45 per cent believe the economy will decline over the next 12 months.
In the previous annual survey, only six per cent predicted a decline in the economy on a 12-month view.
The contrasting findings indicate the UK electorate’s June 23 vote to leave the European Union has had a dramatic detrimental impact on confidence.
The latest ICAS survey, commissioned by CA Magazine, signals significant proportions of finance chiefs are considering cutting headcount and delaying or reducing investment in the UK as a result of the Brexit vote.
Transfer of operations from the UK to elsewhere in the EU is also under consideration by a significant number of finance chiefs.
The survey, of more than 100 ICAS members who are in finance director or chief financial officer roles, shows 15 per cent are considering transferring some activities to elsewhere in the EU as a result of the Brexit vote.
Only two per cent are thinking about moving activities from elsebusinesses where in the EU into the UK.
Nearly one in four finance chiefs said delays or cuts to investment in the UK were under consideration. Four per cent said they were already taking action on this front. Only nine per cent projected an increase in investment.
And 14 per cent are contemplating cutting UK headcount in response to the prospect of Brexit. Nine per cent are already doing so.
The survey, conducted in association with law firm DLA Piper, also reveals particular concerns among finance chiefs about the ability of their organisations to hire EU nationals in future.
They highlight this ability as the most important factor to their organisation, in the context of the Brexit negotiations.
This is followed by, in declining order of importance, minimising regulatory barriers, low EU and non-EU trade tariffs, a free trade agreement with the EU, ability to hire non-EU nationals for UK roles, access to the European single market, and retaining the UK equivalent of grants and other support.
Anton Colella, ICAS chief executive, said: “The UK’s finance leaders have sent a strong and clear message on their priorities to the Government’s Brexit negotiating team – British business relies on Europe for its talent pool.
“The freedom to hire and retain talented people from around Europe must therefore be a crucial part of the Government’s Brexit negotiations.”
He added: “We are already hearing anecdotal evidence that some EU nationals may be thinking about moving their careers out of the UK. This is a key risk to British business and one that the Government needs to address.”
The survey shows 41 per cent of finance chiefs expect flat output or negligible growth, of 0.9 per cent or less, over the next 12 months. Meanwhile, 13 per cent predict modest growth of one per cent to 2.5 per cent, and only one per cent forecast strong expansion.
In the previous annual survey, 54 per cent had predicted modest growth on a 12-month view.
In the latest survey, 74 per cent of finance chiefs said Brexit would create challenges for their organisations. Only 28 per cent saw it creating new opportunities. And only 20 per cent viewed Brexit as a chance to reduce regulatory burdens.
Separately, a survey published today by the Confederation of British Industry shows optimism in the business and professional services sub-sector fell in the three months to August at the fastest pace since November 2011. And confidence among consumer services businesses dropped at the sharpest pace since February 2009, during the last recession.