Brexit insights – a view from business leaders
Our latest research delves into the views and sentiments from business leaders across the country on Brexit.
Many businesses are still unsure about how and what they should be preparing for, but there are some key actions that businesses should be doing now to protect and shape their businesses for the future.
Overwhelmingly, concern is growing that the UK won’t be strong enough after Brexit – a sign that the prolonged uncertainty surrounding Britain’s exit from the EU has eroded business confidence. The research reveals that confidence has dipped to 60 percent down from 73 percent a year ago.
Sentiments towards Brexit seem to have shifted from a ‘highly optimistic’ stance to one that reflects an economic world with an information vacuum and a lack of time to protect against any changes.
Business leader confidence has also dipped in other more specific areas too.
Based on a comparison with last year’s data, more business leaders expect Brexit to lead to a fall in inbound investment – 60 percent, up from 42 percent last year – and Britain’s export market to shrink (43 percent, up from 33 percent last year). There has also been an increase in the number of businesses who expect Britain to have less global influence after Brexit (58 percent, up from 42 percent last year).
It is no surprise that business confidence has slipped significantly over the past year and this is no doubt due to the lack of clarity surrounding the detail of Britain’s Brexit plans.
Without more information, it is inevitable that business leaders will feel less equipped to make clear decisions about their investments and marketing activity. However, there are some areas that businesses can focus on now – including reviewing their employment profile, supply chain agility and responsiveness to regulatory change.
Actions businesses are least likely to have taken
The actions businesses are least likely to have taken, or plan to take, include moving functions or operations from the EU to UK; moving functions or operations from the UK to elsewhere within the EU and setting up a Brexit Action Group.
Understandably, businesses are putting off some of the bigger decisions including changes to their operational structures.
However, 1 in 15 business owners have pulled, or plan to pull investments or other strategic projects. Whilst a relatively modest number, such large-scale decisions are likely to be focused on pursuing growth, market opportunities or protecting cash reserves. Some respondents also commented that while they had not ‘pulled’ a project as such, some had been cancelled or not renewed.
Actions businesses are most likely to have taken
The actions UK businesses are most likely to have taken, or plan to take, include analysing their different trading options; communicating with stakeholders about the implications of Brexit and considering the impacts of future tariffs.
Biggest areas of concern
Brexit will cause a damaging risk to trade
More than half (57 percent) of businesses believe that the amount of leverage the UK has for trade deals will decrease, which has led 59 percent of businesses to analyse different trading possibilities.
More than three quarters (78 percent) of the businesses surveyed would like to see a comprehensive trade deal established with the EU, yet only 18 percent believe that will actually happen.
However, more than half of businesses (55 percent) believe the UK Government will secure a partial trade deal – potentially giving businesses curtailed access to the Common Market – and this may be influencing their decision to sit tight for now and put off larger decisions such as moving operations to another site.
Another primary concern for life after Brexit is access to skills
More than three quarters (78 percent) of business owners are concerned that immigration will be needed to fill the skills gap after Brexit and 73 percent expect the flow of skilled workers into the UK to decrease post-Brexit.
The likelihood of reduced access to skilled workers is a real concern for many businesses and some are planning ahead by looking for talent outside the EU or investing in upskilling their UK workforce.
Strain on supplier arrangements
Two fifths (43 percent) of businesses believe the size of the export market will decrease and yet more than half of business owners (51 percent) have no plans to compare the costs of EU and non-EU suppliers.
For businesses preparing for a potential financial shock, reviewing arrangements that have a direct bearing on cash reserves will be crucial. Reviewing supplier agreements and shaping them in a way that can flex to potential changes to trading conditions will help businesses cater for potential cost hikes. Additionally, analysing alternative supplier options to reduce pressure on the business operationally, as well as its supply chain volatility can help businesses act quickly should they need to.