Surveys show firms spending less and scaling back hiring plans amid Brexit uncertainty
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Gloom surrounds the City of London
Business confidence in Britain has fallen its lowest level in a decade as companies cut their spending and scale back plans amid ongoing Brexit uncertainty, two surveys have found.
Accountancy firm Deloitte surveyed 110 chief financial officers (CFOs), who represent companies with a combined value of £390 billion, and found that Brexit was the rated as the top overall risk to business
Their report concluded that CFOs have adopted their “most defensive strategy stance in nine years”, with 80% saying they expect the business environment to be worse as a result of Brexit.
More than half predicted that hiring will slow, as firms prioritise cutting costs and boosting cashflow.
Ian Stewart, chief economist at Deloitte, said the survey suggested risk appetite is at “recessionary level”, with Brexit “driving a marked shift towards defensive balance sheet strategies among British businesses”.
CNN says the “dire outlook” is backed up by another recent survey, this one by the Institute of Chartered Accountants in England and Wales, which also found that current UK business confidence is at “its lowest level for nearly a decade.”
“Companies at the moment are unclear about the future,” said Michael Izza, the body’s chief executive. “As the [Brexit] roulette wheel continues to spin, UK plc is having to place its bets based on best guesswork”.
Britain is set to leave the EU next month, but with Theresa May struggling to gain enough concessions from the EU to win over a majority in Parliament for her Brexit withdrawal agreement, the likelihood of Britain crashing out without a deal is growing by the day.
Citing economic forecaster the EY ITEM Club, The Times says “continuing uncertainty is also likely to weigh on growth this year”. The group warned that Britain could fall into recession in the event of a no-deal Brexit, although the economy “would grow by 1.5% if a deal was secured”.
Japanese carmaker Nissan cited Brexit as a factor in its decision this weekend to scrap plans to build its new X-Trail model in Sunderland.
News of their withdrawal was swiftly followed by the release of figures showing UK construction growth at a a 10-month low, as Brexit anxiety pushes the sector to the brink of recession.
Data firm Markit has reported that its construction Purchasing Managers’ Index (PMI), which tracks activity in the sector, fell to just 50.6 in January, down from 52.8 in December.
“That’s much weaker than expected, and close to the 50-point mark showing stagnation” says The Guardian.