UK businesses concerned about post-EU referendum economy, whilst access to the single market remains top priority for growth.
New research from business and financial adviser Grant Thornton UK, which has its East Midlands regional office in Leicester, suggests that UK businesses are less confident about their businesses' success in the year ahead than they were before the outcome of the referendum.
Nearly half (49%) of respondents were less confident over the year ahead, whereas only 8% felt more confident. Moreover, one fifth (21%) are actively planning to decrease investment over the coming year, whilst 56% remain unchanged in their investment decisions.
Respondents largely pointed to the impact of a general decline in the UK economy as a concern (74%), along with the impact of exchange rate movements (57%) and declining consumer confidence (55%) as areas which may affect their business.
Chris Frostwick, partner and practice leader of Grant Thornton in Leicester, commented: "Whilst much of the immediate political and economic turbulence following the outcome of the vote has settled over the past few weeks, the general outlook for the UK economy remains a top concern for most businesses. Many of the businesses we speak with are taking a business-as-usual approach to their day-to-day operations, but looking further into the horizon, some are reconsidering their investment intentions based on the post-vote indicators and general mood music in the markets.
"The Bank of England's interest rate cut earlier this month will have been met with mixed reactions. Many businesses will be encouraged by lower borrowing rates and the stimulus package announced; whereas others will see the reciprocating impact of the fall in sterling hit their cost of imports and be discomforted by the BoE's outlook on the UK economy.
“There have been immediate winners and losers as a result of changes in foreign exchange rates, and businesses and our clients in and around Leicester are adjusting to that. What is equally clear is that businesses are uncertain about how the economy will perform over the next 12 to 24 months – part of that is Brexit and part of it is global economic performance, and it is difficult to distinguish between the two.”
When asked about what areas the new government should prioritise to support business growth post-referendum, respondents pointed to:
· Full access to the single market (67%)
· Continued EU recognition of equivalence of UK regulations and standards, including 'passporting' (52%)
· Trade deals outside of the single market (50%)
· Continued free movement of people (42%)
Asked when they believe the new Prime Minister should enact article 50 and begin the formal negotiation process, respondents were split on the timing:
· Immediately (6%)
· Within 3 months (28%)
· Within a year (35%)
· Not until at least a year has passed (23%)
· Don't know / not sure (7%)
Chris adds: "Despite the lack of consensus on the timing for article 50 to be triggered, the general sentiment we're getting from clients and the market is that they want the government to have a clear vision before beginning the negotiations. Businesses are encouraging the government not to rush the process, but acknowledge that delaying it increases uncertainty, which is equally bad for business.
"Negotiating Brexit and determining a new legal and regulatory framework for the UK is an unprecedented challenge. It's critical that the government use this opportunity to collaborate across the public, private and third sectors to make this happen so we can look back and feel proud of how all contributed to our nation's future at this critical stage."
Grant Thornton has its East Midlands office in Leicester, where it has approximately 160 staff providing business and financial advice across Corporate and Personal Tax, audit and assurance, employer solutions, corporate finance, and sustainability, to organisations across the East Midlands.