UK business confidence plummets

UK business

British businesses are the most gloomy since the 2016 referendum, finds Deloitte survey

British businesses are the most gloomy they have been about Brexit since the 2016 referendum, with eight out of 10 finance leaders expecting the long-term business environment to be worse as a result of the UK leaving the EU.

The accountancy group Deloitte has warned that worries over the long-term impact of Brexit are mounting, with more than half of finance bosses expecting to rein in recruitment and spending.

Deloitte’s latest quarterly survey of chief financial officers (CFOs) found only 13% were more optimistic about the prospects for their company than they were three months ago.

The first-quarter survey gauges sentiment among the UK’s largest businesses in the wake of parliament’s successive rejections of Theresa May’s Brexit deal. Deloitte interviewed 89 CFOs, including 48 representing FTSE 100 companies and smaller firms on the FTSE 250.

Pessimism about the short-term effects of Brexit remains high, with nearly half (49%) of CFOs expecting to reduce their capital expenditure and 22% anticipating having to trim mergers and acquisitions activity. More than half (53%) of CFOs also expect to reduce hiring staff because of Brexit – the highest level in more than two years.

Deloitte’s chief economist, Ian Stewart said that put mildly, it’s been a turbulent few weeks and there’s been little change in confidence and risk appetite among CFOs, as many priced in a tougher environment at the start of the year.

He added that they went into March braced for tough times and the latest round of Brexit uncertainties have not materially changed that picture. When expectations are already low, it’s harder to be disappointed.

Meanwhile, a separate survey from the recruitment consultancy Morgan McKinley Financial Services has revealed economic uncertainty is biting despite small (quarter-on-quarter) rises in jobs for the first quarter of 2019. London has half the jobs and numbers of job seekers in financial services since 2017 because of Brexit-related confusion, it said.

The managing director of Morgan McKinley Financial Services, Hakan Enver said that they closed 2018 with a dramatically poor jobs market because it’s become virtually impossible for businesses to grow here so they started 2019 on the back foot. They have under half the jobs and under half the job seekers compared with this time in 2017.