Middle market leaders are becoming increasingly nervous about the UK’s decision to leave the EU. After showing signs of optimism over the summer, they now expect Brexit to dent their short-term business prospects.
RSM’s Brexit Monitor – carried out before a deal was struck with Brussels – shows business decision makers think Brexit will have a more negative effect on their business over the next two years than positive. Sentiment dipped from 105 to 98, on a scale of 0 to 200 (where 0 represents a strong negative effect, 100 no effect and 200 a strong positive effect).
Yet despite confusion in boardrooms, businesses are still confident about their ability to adapt in the long run. When asked about their five-year business prospects, middle market leaders were more optimistic. Sentiment stood at 105 on RSM’s Brexit Monitor.
Amid concerns about shifting exchange rates and unknowns about the UK’s future relationship with the EU, decision makers can still find causes for optimism.
Amid growing nervousness, it’s critical businesses achieve further clarity on the terms of the UK’s divorce settlement with the EU. While businesses are taking proactive steps to prepare for Brexit, many appear to have reached a limit in terms of the action they’re willing to take without knowing more.
Simon Hart, RSM’s Brexit lead partner, said:
‘While many businesses are understandably frustrated about the lack of certainty regarding our future trading arrangements, they remain relatively sanguine about the overall economic impact of Brexit over the longer term.
‘Middle market businesses are far more concerned about the short-term implications of Brexit, although this isn’t true across the board. Consumer and financial services companies are most concerned, while construction and TMT firms remain bullish.
‘Clearly, many businesses will be relieved that the government has reached an agreement over the divorce settlement with the EU. It will be interesting to see if sentiment changes over the course of the year when trading negotiations start in earnest.’