Half of UK businesses lack confidence in government’s Brexit strategy
The immediate aftermath of the shock Brexit referendum result of 2016 has seen Britain perceived by many businesses as a more volatile, vulnerable place to base operations, while an inconclusive general election a year later has significantly weakened the negotiating hand of beleaguered Prime Minister Theresa May. According to a survey of business leaders in the UK, as many as 60% have lost their confidence in the ability of the government to tackle the challenges which lie ahead.
Britain’s vote to leave the European Union by 2019 has remained a contentious issue long after the apparently definitive vote was taken in 2016. The vote brought national class, generational and immigration-related rifts to the fore of social, political and economic life, as 51.9% of the UK’s voting public voted to reject the continued membership of the EU. The economic community was initially established by the treaty of Rome some 60 years previously, to establish the integration of sovereign power and economic rights in order to bring to stability to the region in the wake of two World Wars and multiple global economic crises. The institution subsequently enshrined a number of key rights for member states, including the tariff-free movement of goods between EU borders, and the free movement of labour, as citizens in the European economic area were granted visa-less travel – something that has become increasingly unpopular not just in the UK, but among remaining member states, suggesting the Union’s future may be a tumultuous one with or without Britain.
A year after the infamous Brexit vote, Britain went to the polls again, having triggered Article 50, the starting gun for negotiations to formally secede, in March. The snap election called by Conservative Prime Minister Theresa May was allegedly called at the behest of Jean Claude Juncker, President of the European Commission, who was said to have suggested the incumbent government did not have a mandate to continue. The election, which when it was called saw May’s party some 20 points ahead in opinion polls, eventually brought about a shock result of a hung Parliament, with Jeremy Corbyn’s oppositional Labour Party performing far better than pollsters suggested, gaining its largest vote swing since 1945. While the Conservatives remained the largest minority in Parliament, forming a coalition with a majority of just two MPs, with hard-line Northern Irish Unionist party, the DUP.
Sliding confidence in Brexit talks
Since the deal to retain power, the government has come under increasing criticism for its approach to negotiations with the EU, which began shortly after the surprise electoral set-back. Now, a recent survey conducted by peer-to-peer finance platform Market Invoice found that 54% of 3,000 businesses polled said the government had lost its way in talks with Brussels and that Brexit Secretary David Davis lacked preparedness, while only 5% felt he was doing a good job.
The professional services firm also found nearly 60% of respondents felt securing the right trading arrangements with the EU was their top priority in Brexit talks, ahead of having access to EU workers at 18%. New figures released by the Office for National Statistics show Net migration to the UK has fallen by a quarter to 246,000 in a year meanwhile, as EU citizens vacate Britain ahead of Brexit, suggesting that this access will diminish substantially in the event of a Hard Brexit, favoured by the government, which would see Britain withdraw from the Single Market, ending free movement with EU nations. EU net migration was estimated at 127,000 in the 12 months leading to March 2017, down 51,000 on the previous year, while the figure for the rest of the world was down by 14,000 to 179,000. Maintaining stability in the sterling was meanwhile considered important by just 7%, reversing a KPMG study of businesses performed earlier in the year. In response to the falling pound however, the UK is projected to lose as many as 40,000 investment banking jobs post-Brexit.
The ambiguity of Brexit remains a key issue particularly in the business sector, with a 30% decrease in the profit pool across companies from various sectors, with the grocery, food and drink, and automotive industries being the most affected. The profit reduction will most likely be passed on to consumers. Conversely however, EY has released a new study surrounding the international investments made within the Eurozone, reporting a greater portion of upcoming projects which is said generate a quarter of a million jobs in order to pursue Europe’s perceived opportunities.
This seems to suggest the possibility of some of the benefits Brexit may provide, as businesses and policy makers will have to invest into the development of a stronger software industry in addition to the the growing services and talent. Yet, these plans have experienced a set back as a third of businesses have abandoned their plans for expansion with an equal amount of firms deciding against the introduction of new products into the market.
A total of 20% of firms voted against further financial support spent on marketing, and aim to reduce it in the nearby future. A 54% majority of small businesses have not yet witnessed Brexit leaving a negative impact on the hiring plans, as only 2% are predicted to reduce exposure to EU nationals with a further 6% being more reluctant to hire from the bloc.
Commenting on the findings, Market Invoice CEO Anil Stocker said, “Business leaders are clearly focused on ensuring they are prepared to do business before worrying about people issues. Anecdotal feedback from this survey is that businesses in the UK are getting on with it but are clearly unsettled which doesn’t make for a healthy business environment.”
