Brexit rated biggest threat to UK business as confidence falls

Hiring in the UK has hit its lowest level for 25 years as Brexit becomes the biggest threat to UK business “by far”, ahead of trade wars, weak UK demand and geopolitics, two surveys revealed on Monday.

A survey from Deloitte revealed that UK businesses are now heavily dependant on the outcome of the Brexit negotiations with the European Union, and the rising possibility of a disappointing result weighed heavily on business sentiment in Q3 this year.

More bosses are reining in hiring and investment plans while CFO’s have become more pessimistic about the long term effect of the divorce with only 12% believing now is a good time to take risks.

Cost reduction is currently the top corporate priority and CFO’s are more focused on doing so than at any time in the last eight years. Around 79% of CFOs now expect Brexit to lead to a deterioration in the overall environment for business in the long term.

Also, the proportion of CFOs reporting an increase in recruitment difficulties or skills shortages experienced by their businesses rose to almost half in Q3.

Ian Stewart, the chief economist at Deloitte, said: “Indeed, CFOs are more negative about the effects of Brexit today than at any time since the EU referendum.”

David Sproul, senior partner and chief executive at Deloitte said: “The drop in business confidence highlights the effect a possible no-deal Brexit is having on businesses across the UK. A deal and smooth transition could deliver a real boost to business spirits.

“Our survey shows that access to skills is an increasingly pressing issue. It’s crucial that a post-Brexit immigration system ensures that business has the skills it needs to thrive.”

UNCERTAINTY TAKES A BITE OUT OF THE ECONOMY

The Deloitte report is not the only recent study that reveals the negative effects that Brexit uncertainty is having on UK business.

The British Chambers of Commerce’s last quarterly survey showed that this year’s annual economic growth is set to be the lowest since the financial crisis.

The report revealed that the percentage of services firms attempting to hire staff is at its lowest level for 25 years. Only 47% of businesses are recruiting workers (down from 60% three months ago) and they are having difficulties.

The BCC also reported a slowdown in the number of manufacturers reporting higher export orders, with 81% of factories suffering from a rise in raw material costs, which is forcing many to raise prices.

Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: “These figures reinforce what we are hearing from businesses up and down the country – the uncertainty over Brexit, and the lack of bold moves to boost business at home, are starting to bite.

“It should be a matter of grave concern to government that sales and orders both at home and abroad are stagnating. Weaker sterling is no longer proving a boon to many of our exporters, while consumer spending is failing to boost the domestic market. We have a vibrant and innovative business community that wants to invest and grow, but we are stuck in limbo while Brexit negotiations rumble on.

“The upcoming Budget must deliver radical, decisive action to boost growth and productivity at precisely the moment that the economy needs it most. There has never been a more important time for the government to bolster business investment, competitiveness and productivity, in the face of significant Brexit headwinds,” he concluded.