UK companies remain uncertain about the possible impact of Brexit, new research has shown, with a significant split in opinion as to the effect the withdrawal from the EU will eventually have.
Just under half of the respondents to a survey carried out by the Financial Times and the Chartered Governance Institute (ICSA) said they thought Brexit would be damaging, but 50% said it would bring no change to their business.
The FTSE 350 companies surveyed were also divided over the impact of a no-deal Brexit, with 36% saying it would be harmful, 26% believing that it would not be damaging, and 38% unsure.
Brexit expert Clare Francis of Pinsent Masons, the law firm behind Out-Law, said companies should focus internally to navigate the next few months.
“As the trade negotiations are set to start businesses still lack certainty on the UK’s future trading relationship with the EU. With EU chief negotiator Michel Barnier ruling out a trade deal similar to Canada and the UK setting out its stall that the UK must have the ability to set its own laws, exactly what the future landscape will look like remains unclear,” Francis said.
“Businesses need to focus on the practicalities and what tangible actions they can take in order to minimise impact on their business and supply chains,” Francis said.
Despite the uncertainty over Brexit, the latest edition of the FT-ICSA Boardroom Bellwether Survey found that economic confidence had improved significantly in the last six months.
The report said twice as many of the company secretaries responding to the survey were predicting an improvement in global economic conditions compared to six months ago, and UK listed companies were five times more optimistic about the UK economy despite the Brexit uncertainty.
Over a fifth of respondents (21%) are predicting an improvement in the global economic environment, up from 10% in summer 2019, and 36% predict an improvement in the UK economy, up from 7% in summer 2019.
Companies also said they were more optimistic about their own industries. In summer 2019 only 14% were optimistic about their industry’s outlook, but this had risen to 26% in the latest survey. A significant number of companies – 31% - are still pessimistic about the outlook, but this is a fall from 43% six months ago.
Nevertheless researchers found that companies are not planning significant capital expenditure. Only a third of respondents expect to increase their expenditure, down from 43% six months ago, and only a fifth (22%) of respondents have plans to increase job numbers in the UK over the next year.
The new research backs up earlier studies suggesting that Brexit had impacted UK productivity and investment, such as a report produced by the Bank of England in September 2019 which found that Brexit had reduced UK productivity by between 2% and 5%, and cut UK investment by around 11% over three years.
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