Mixed signalsSince Brexit was announced, there has been a strong speculation that businesses and particularly the financial sector, which was chiefly against exiting the EU, will be looking to move operations away from London. The lack of financial passporting was a specific issue for banks that were worried trading outside of the UK will become incredibly difficult. The government’s recent white paper is designed to offer clarity on topics such as immigration, amongst fluctuating surroundings but the business sentiment remains unclear. Our own research recently found that financial decision makers across large and medium-sized businesses in the UK had already seen Brexit pitfalls negatively impact potential growth. Near half of the 200 surveyed said they are now more likely to leave or reduce investment in the UK, with Brexit damaging their overall business sentiment. Amidst the politically charged media commentary, Dun & Bradstreet’s report revealed that businesses are waiting to see what impact negotiations between the UK government and the EU will bring. Theresa May’s recent updates have shone some light on Brexit plans but there is still uncertainty for UK businesses. It’s important, however, that companies remember there is currently no accessible data that can explain the entire situation facing the UK because, as it stands, we are still a member of the European Union; and we will be until mid-2019 at the earliest. Feelings of frustrations, fear and uncertainty are a given at the moment but that doesn’t mean business leaders should be making rash decisions; 72 per cent of those that we surveyed claimed they were planning for change post-Brexit to manage the expected business and market fluctuations. Without any concrete data and evidence, the only certainty at the moment is that the UK will have to open discussions about vital topics such as financial passporting, potential revisions of regulation and the free movement of labour, the latter of which will no longer apply when we exit the EU. The financial industry has frequently expressed its reservations with a “hard Brexit” given that it would eliminate passporting rights.
One eye on the futureThe economy continues to show tough resilience amidst the uncertainty of Brexit, with recent GDP growth rising by 0.6 per cent compared to the 0.5 per cent estimated, although sterling continues to drop. We expect the GDP figure to fall in 2017 after invoking Article 50. Brexit is definitely something most businesses should follow closely to understand the full economic implications. Britain is still a healthy business location, with strong and growing ties outside the EU. By making the best use of data, and remaining fully informed, business leaders can reap the rewards of calm thinking and well-thought out risk strategies to manage Brexit pitfalls. Markus Kuger is senior economist at Dun & Bradstreet Image: Shutterstock
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