Despite continued political uncertainty about Brexit, the majority of businesses from the United Kingdom, France, Germany, and Spain are prepared for the UK’s departure from the European Union and are confident of an upturn in turnover, employment, and customers.
The findings were published on February 12 by FTI Consulting, an international business advisory firm, in a new survey of over 2,500 senior decision makers undertaken by its Brexit task force. They come from four major EU economies (France, Germany, Spain and the UK).
Confidence remains robust, with business expecting the UK to retain tariff free access for goods, free movement of people, and ECJ jurisdiction. Greater uncertainty exists over whether the UK will retain financial passporting rights. The next few months will be critical as businesses expect more clarity by the summer, which will enable them to make key commercial and investment decisions as they plan for the future.
The survey, which points to an expectation of a ‘soft Brexit’, covers what business think will happen in the negotiations, the immediate impact following Brexit, and how they are preparing themselves for the outcome. Eight out of ten respondents said their company had established a dedicated Brexit team to manage the consequences and identify the opportunities.
The survey reveals some interesting findings, including:
1. 75% of firms expect clarity on the UK/EU relationship by June 2018 at which point ‘irreversible changes’ will be made to their business planning.
2. Optimism prevails with 66% of businesses anticipating an increase in turnover – only 12% expect a decrease. 64% of all firms expect to see some increase in employees following Brexit. Only 10% anticipate a decrease.
3. 65% of all businesses believe UK will retain tariff free access for goods, 59% that free movement will remain and 52% that ECJ jurisdiction will continue.
4. Bigger margins exist over financial passporting rights with 71% of UK financial services firms believing they will be retained compared with 59% in Germany, 56% in Spain and only 51% in France.
5. 85% of UK firms have established Brexit response structures, with 84% in Spain, 82% in France and 80% in Germany. However only 40% are focused on dealing with supply chain issues and just 24% are planning to influence policy makers.
While the survey shows that 68% of firms feel prepared for Brexit, with 85% of respondents either ‘very satisfied’ or ‘slightly satisfied’ regarding their Brexit response to date, only 40% said they were dealing with supply chain issues. Surprisingly only 24% were focused on engagement with policymakers. This suggests that far too few are preparing sufficiently in a process that could become quite bruising as both sides seek a robust and comprehensive trade deal.
Other highlights include:
1. Majority of European business believe Brexit will happen. French leads certainty with 72%, followed by UK (68%), Germany (66%) and Spain (65%).
2. 74% of UK business expressed concerns about Brexit’s potential impact compared to an average of 61% for German, French and Spanish firms.
3. In terms of sectors, financial services expressed the most concern about Brexit’s potential impact at 70% of respondents, against 65% for both manufacturing and professional services.
4. 68% of all firms feel prepared for Brexit. However there is significant discrepancy in understanding the potential impact: French firms display the most confidence with 90% satisfied they understand the regulatory issues. German business believe they understand the implications least well.