Business trusts Hammond far more than May to take the economy through Brexit, a new Thomson Reuters survey shows

Business adopts a ‘wait and see’ approach as 70% of CFOs say Brexit is yet to affect their strategic planning

LONDON – A survey of 200 Chief Financial Officers (CFOs) across the UK and Europe will make difficult reading for those charged with delivering Britain’s exit from the EU.  In a survey conducted for four weeks in July and August for Thomson Reuters, business leaders ranked their confidence in leading politicians: International Trade Secretary Liam Fox earns the lowest score at 3.15, the Prime Minister Theresa May is at 3.47, while Foreign Secretary Boris Johnson comes in at 3.89 out of 10 and David Davies, the Brexit Secretary, received 3.84. However, it appears that industry takes an altogether more positive view of the Chancellor, who received an average score of 7.9, while the Governor of the Bank of England topped the poll at 8.6.

The CFO Brexit Survey, which launches today, will be conducted quarterly and polls companies that generate between $100 million and $5 billion plus in revenue annually, across 15 sectors. The survey measures individual sectors and the overall business community’s reaction to Brexit, specifically asking what impact Brexit has had, or will have on: company expansion, investment, headcount, relocation and compliance.  

According to the data, 70% of businesses say that Brexit is yet to affect their strategic planning, but some are now taking initial steps in their planning. 26% of financial services respondees and 29% of both retail and manufacturing firms said that they were scenario planning for the various outcomes of the negotiations; 20% of technology and 17% of energy said that they were investigating moving functions from the UK.  However, the largest figure across all sectors (43%) said that they were merely observing the process, rather than taking any immediate action.

 “The results suggest a relatively muted response from business so far - not the kneejerk reaction that some expected.” said Laurence Kiddle, Managing Director for the EMEA Tax & Accounting business of Thomson Reuters, which conducted the research. “Concern for the future trade deal between the UK and the EU has understandably caused some companies to hold off from expansion; and we will continue to see decision deferral until more detail becomes clear.  It is obvious that the business implications of Brexit are beginning to emerge from the mist of rhetoric and speculation.” 

When asked if they anticipated increasing or decreasing staff as a result of Brexit, 40% of the survey panelists said they expected no change, while 34% said that they expected a decrease.  However, this did not reflect the significant differences between sectors; 60% of retail responded that they anticipated decreasing staff; next largest was energy at 47%, 23% in financial services and 22% of the technology sector.  

The differences were only slightly less marked when CFOs were asked if they anticipated relocating staff from the UK; 39% of manufacturing said that they did. This fell to 25% in retail, 19% in financial services and 16% in energy. 

Overall, 23% of those surveyed identified the UK leaving the EU without a trade deal as the single biggest risk to their business. However different sectors flagged concerns relating to their own business; over 30% of the financial services sector understandably flagged leaving the EU/EEA passporting regime as their greatest concern, while 31% of retail said that they were most concerned about depreciation of the pound. 

Kiddle added, “This is the first of a quarterly survey and I look forward to seeing how the figures change as time and the Brexit negotiation process continues.

Download the CFO Brexit Report Summer 2017.

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