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UK finance chiefs put hiring, investment plans on hold amid Brexit concerns
Majority of chief financial officers (CFOs) at British firms are supporting for staying with the European Union (EU). However, most of them have postponed their key financial decisions on investments and hiring owing to spreading concerns about the Brexit impact across the UK. The industrial and business segments are in wait and watch mode until the referendum on Brexit in June 2016.
A latest survey indicates support for staying with EU has increased to 75 percent. However, majority of financial bosses are postponing their decisions as concerns about Brexit impacting the British economy. All eyes are on referendum on decision to whether UK stays with EU or not in June 2016. Several financial bosses at UK firms have put their key decisions on hiring and investment on hold until the said schedule.
The Guardian reports risk appetite fell to three-year low in a poll conducted involving 120 CFOs from FTSE-350 firms and other larger private companies. Global consultancy firm Deloitte has carried out a survey that highlighted the strategy and mood of financial chiefs about Brexit. Now, Brexit tops the priority list of majority of CFOs leaving concerns about global turmoil and growth in Eurozone.
Deloitte chief economist, Ian Stewart, said "A fog of uncertainty has descended on the corporate sector. Perceptions of financial and economic uncertainty are back to levels last seen in early 2013 as the euro crisis abated."
Regardless of how many support or not, Brexit is casting a cloud of uncertainty among financial bosses. Several economists and professional advisors receive numerous calls from their clients enquiring about Brexit and its impact. Now, only Brexit matters a lot.
Business investments declined by two percent during the last quarter of 2015, according to Office of National Statistics (ONS). Increasing concerns about Brexit are impacting the UK economy and referendum is causing a slowdown in economic ctivity. Two-third of 120 CFOs from FTSE 350 companies and other major business firms expressed their opinion that it's a bad time to take risk onto their balance sheets, as reported by The Financial Times.
Stewart further said "Since the announcement of the date of the referendum, demand from clients to understand the risks has gone up. A year ago it was a distant possibility, now we have got a date and people are more focused on the issues."
The latest Deloitte's survey highlighted the increased support on staying with EU to 75 percent of CFOs from 62 percent in last quarter of 2015. About 28 percent of CFOs expressed their views that their positions are subject to the outcome of the referendum and Prime Minister David Cameron's negotiation of UK membership. However, Deloitte didn't include this option in the latest survey questions.
Like many other industrial verticals, the insurance sector is also suffering the most from Brexit tremors. Over two-third of traders at Lloyd's of London reveal that Brexit is bad for the £60-billion UK insurance business per annum. City PR firm Haggie Partners carried out a survey that revealed 68.7 percent of brokers and insurers are against Brexit as it would hurt UK's economy and damage Lloyd's of London. About 25 percent of brokers opine that there wouldn't be any impact, while 6.2 percent said it would benefit Lloyd's, which has history dating back to 1688 of Edward Lloyd's City coffee house, according to Shropshire State.
British Prime Minister David Cameron has recently announced his EU deal and referendum date to be on the 23rd of June 2016. The latest survey has stated that eight percent of CFOs are optimistic that UK business would benefit from exiting EU, while 17 percent expressed their concerns of their positions and preferred to stay with EU.