Brexit is no longer the biggest concern of big businesses in the UK, who now believe that weak growth is the biggest threat facing UK corporations, according to a poll published today.
The survey conducted by Deloitte of 106 chief financial officers (CFOs) from some of the UK’s biggest firms showed that the Brexit transition deal that was reached last month had boosted optimism for UK business.
Rating risk on a scale of zero to 100, CFOs ranked weak growth as the most pressing concern with a score of 57, while the effects of Brexit came in just below at 56.
Deloitte surveyed the CFOs between 7 to 21 March, with around a fifth of respondents answering after the deal was announced on 19 March.
The company found that over a quarter (27 per cent) of finance bosses who answered the survey after the deal was struck were more confident about the future than they were three months ago.
In comparison, only 18 per cent who answered the survey before the deal was announced reported being more optimistic than three months ago.
The Brexit deal also strengthened corporate appetite for risk, as only 12 per cent of CFOs thought it was a good time to take on risk before the deal, compared with 23 per cent afterwards.
Uncertainty amongst businesses hit a two-year low, with 31 per cent saying there was a high or very high level of financial and economic uncertainty facing their business, down from 38 per cent the previous quarter.
Ian Stewart, chief economist at Deloitte UK, said:
The Brexit transition deal seems to have had a positive effect on the corporate mood with a clear uptick in optimism and risk appetite between those responding to our survey before and after the news from Brussels.
Business confidence has edged up and is running not far off its long-term averages. CFOs have shrugged off weakness and volatility in equity markets with perceptions of uncertainty dropping to the lowest levels since spring of 2016, before the EU referendum.
David Sproul, chief executive of Deloitte North West Europe, explained that though Brexit remained a big issue for UK CFOs, fears were slowly easing.
“Brexit remains a major concern for UK CFOs, though one which, in the wake of the announcement of the transition deal, is easing,” he added.
“Concerns about the dampening effect on corporate spending plans remain, but they have softened. Importantly, for the first time in two years, Brexit is not the biggest risk CFOs say they face. Weak UK demand is cited as the top concern, though there is likely to be a relationship between the two.
“The effect of the transition announcement on this quarter’s survey results underscores the sensitivity of sentiment to developments in the Brexit negotiations,” Sproul continued.
“The moment of truth on Brexit is approaching. The UK government hopes to strike a deal with the EU and have it endorsed by Parliament this year. Whether it succeeds in doing so seems likely to be a major driver of business confidence through the rest of this year.”
Source: City A.M.