Brexit negotiations have remained complex since Article 50 was triggered on 29th March, and will no doubt continue to be so with a non-majority Government in the negotiating seat and 40 years of trade deals and policy rulings to unpick, but what does all of this mean for businesses?
Twice as many companies saw Brexit as negative rather than positive in our Risk and Confidence Survey. When asked what the single most important factor impacting business confidence was, business leaders cited a number of factors but Brexit was the most frequent response.
But whilst Brexit is a complex and multifaceted issue, businesses should be aware of the potential effects in these areas:
- Sterling Weakness: Almost half of those surveyed believe that Brexit’s impact on the value of the sterling will be negative for their business, while less than a quarter thought it would be a positive. Since the referendum the pound has plummeted, reaching its lowest levels in 31 years against the dollar. As David Brosnan, CEO of CNA Hardy, said; “The negative impact of weakening sterling is clearly outlined by business leaders in every sector that we surveyed, across all job functions and sizes of business.”
- Inflation: Although exporters may stand to benefit from the weak pound, other businesses will need to raise prices to compensate for rising raw material costs, putting pressure on stressed UK consumers. This in turn heightens the risk of inflation, which may squeeze company margins and weaken investment potential.
- Hiring: 36% of organisations are exercising caution around hiring, with some expressing particular concerns about their ability to access the talent they wanted in a post-Brexit environment. On top of this businesses, in a variety of sectors have predicted that leaving the EU will lead to a fall in profits, and may lead to job cuts.
- New Markets: 80% of business leaders are prioritising the pursuit of topline growth – opening up or expanding new markets, growing market share or building sales. In this regard, companies mentioned Asia more than any other region, probably due to Britain’s future as part of the European Single Market being at risk. Though many business leaders also cited worries over access to funding and availability of investment as a potential constraint on their growth plans.
These findings come from our Risk and Confidence Survey, for more insights download your copy here www.cnahardy.com/pulse.