ICAS poll of UK finance directors shows confidence slumping after Brexit vote

The survey also found that the freedom to hire EU nationals in post-Brexit UK is the number one concern for the UK’s FDs.

Nearly half (45 per cent) of those polled predict the economy will shrink in the next 12 months. A further 41 per cent believe that growth will be “flat or negligible” (GDP growth below 1 per cent) for the remainder of this year.

Last year, in contrast, more than half the FDs in the survey had predicted “modest growth”, of more than 1 per cent, for the UK.

This year, FDs of companies with turnover of more than £100m were the most pessimistic, with 48 per cent predicting the economy to decline again over the next 12 months.

In terms of priorities for negotiating the UK’s exit from the EU, the FDs and CFOs rated the ability to employ EU nationals for UK-based roles as even more important than the UK securing a free trade agreement with the EU, and the UK gaining access to the European single market.

Anton Colella, ICAS Chief Executive, said: “The UK’s finance leaders have sent a strong and clear message on their priorities to the government’s Brexit negotiating team - British business relies on Europe for its talent pool.

“The freedom to hire and retain talented people from around Europe must therefore be a crucial part of the government’s Brexit negotiations.”

“We are already hearing anecdotal evidence that some EU Nationals may be thinking about moving their careers out of the UK. This is a key risk to British business and one that the Government needs to address. “

Uncertainty over the UK’s relationship with the EU post-Brexit is rated as the biggest barrier to growth this year. Domestic political factors in the UK were cited as the second most significant barrier to growth. Nearly one in four (23 per cent) are considering delaying or cutting investment in the UK following the EU referendum, 14 per cent are considering cutting headcount, and a further 9 per cent are already cutting their staff numbers.

15 per cent are considering transferring some activities to elsewhere in the EU, with just 2 per cent considering transferring activity into the UK.

Innovation appears to be a growing concern for FDs, with bringing new products and services to market rising as the fourth highest priority, up from seventh place last year.

Controlling costs, growing revenues and staff recruitment and retention were once again highlighted as the top three priorities facing FDs. “Currency exchange rates” is featured in the top 10 priorities for the first time this year, in sixth place.

74 per cent of those surveyed said that Brexit will create challenges for their organisations. Conversely, 28 per cent believe Brexit will create new opportunities. Only 20 per cent saw Brexit as a chance to reduce regulatory burdens. It should be noted that some saw both challenges and opportunities.

Brexit could be good news for advisory firms, however, with 24 per cent of the FDs saying they are considering seeking advice on the implications and 17% indicating that they are already working with Brexit consultants.

Mr Colella said: “While the UK’s decision to leave the EU has created unprecedented challenges for Finance Directors and CFOs, there are also opportunities for innovation and positive change highlighted in this year’s survey.

“The government’s Brexit negotiation team and advisory firms must now do all that they can to work with finance leaders, reduce uncertainty and remove barriers to growth so that UK business can continue to flourish as it faces its new future outside of the EU.”

Simon Rae, managing partner of DLA Piper in Scotland, said: “Looking at the results of this survey, it’s no surprise that political uncertainty is top of Finance Directors’ list of barriers to growth, with general feelings of political uncertainty intensified by concerns about what the UK’s relationship with the EU might look like in a post-Brexit Europe. In the year ahead, we’re expecting to see renewed interest in innovation, as businesses strive to remain competitive by bringing new products and services to market coupled with the careful management of costs. Only time will tell but, as things stand, 45 per cent of FDs surveyed this year expect the economy to decline in the next 12 months - by comparison, only 6 per cent held that view a year ago.