Article 50 has not yet been invoked, nor the formal process begun of the United Kingdom leaving the European Union, yet the vote for Brexit in last year’s referendum is already starting to have a negative effect on businesses, according to a new study by Ipsos MORI.
In the Captains of Industry study, 58% of Captains felt that, since the referendum, the decision to leave the EU has had a negative impact on their business. A third of Captains (31%) didn’t feel that Brexit had made any difference to the business situation for their company and just 11% feel it has made a positive impact.
Business leaders of the FTSE 500 anticipate a more negative business situation in the next 12 months. Two thirds (66%) feel the business situation of their company will be more negative post Brexit, with only 13% suggesting it will have a positive impact. However, the data suggests that this could improve in the long term, with a third of those interviewed (32%) feeling they would see a positive impact on their business in five years’ time and 45% expected to feel a negative impact.
84% of Captains interviewed agreed/strongly agreed that ‘how well the government actually handles Brexit negotiations is vital to my business’. Although half of those interviewed (50%) disagreed that they were confident in the ability of the government to negotiate the best deal possible for UK businesses with the EU.
Despite ongoing uncertainty, the majority of business leaders (96%) are confident their company can adapt to the consequences of leaving the EU. Over two thirds of Captains have already taken action in response to the Brexit referendum results. 30% of Captains have currently done nothing as a result of the decision to leave the EU. Of those businesses who have started to take action as result of the decision to leave the UK: 14% of Captains mentioned putting contingency plans in place/analysing the impact of different renegotiation outcomes, 10% are moving business outside the UK, 7% are looking at currency changes/stability and a further 7% mentioned providing reassurance to foreign staff.
Captains expressed that the most important things for the UK to obtain during negotiations to leave the EU are: Movement/access of skilled labour (54%), securing free trade/single market (47%), passporting rights (16%), controlled/clarity on immigration (13%), continuing being a trading partner with Europe (9%), tariff agreement (9%).
In order to be successful in a post-Brexit UK, Captains felt the most important factors for business were reducing the level/complexity of regulation (86%) and keeping it easy to recruit EU staff (86%).
Ben Page, CEO of Ipsos MORI, says: “Our annual survey of FTSE 500 business leaders provides a unique insight into what the business world is thinking ahead of Brexit. Unfortunately, it looks like business in this country is already feeling the pain of the economic upheaval of leaving the EU, with 58% of Captains of Industry stating that their business has suffered negatively since the referendum. According to respondents there is no sign that this is likely to ease this year, with two thirds saying they thought their business situation would get worse in the next 12 months.
“However, it is not all doom and gloom. 32% of respondents said they think their business will start to feel the positive effects of leaving the EU in five years’ time and the number of Captains that think it will remain a negative impact reduces to 45% when looking at long range forecast. Businesses are also ready to adapt in order to survive, and thrive, with 96% of business leaders feeling confident that their company can adapt to the consequences of the Brexit outcome.”