Two thirds of firms fear Brexit will hurt business as uncertainty stalks the land

The IoD found that 64 per cent of its members expect ‘Brexit’ to hurt their business as leading economists predicted UK interest rates will be cut from their historic low of 0.5 per cent – possibly to nothing – as the Bank of England (BoE) moves to shore up Britain’s finances after last Thursday’s referendum result.

The City is bracing itself for further turmoil today amid the uncertainty after seeing a slide in the value of the pound and £50 billion wiped off the value of leading shares on Friday.

According to reports, global banking giant HSBC has signalled that it would relocate 1,000 staff from London to Paris if the UK left the single market.

The staff who would be relocated would be those who already process payments made in euros for HSBC in Canary Wharf, according to the BBC.

HSBC, the world’s fourth largest bank by total assets and which already has more than 10,000 staff working in Paris, declined to comment.

Last year the bank revealed that it was already planning to cut 8,000 jobs in the UK to reduce costs and that it was keeping its global headquarters in London, only after a review.

Meanwhile, Bank of America Merrill Lynch (BAML) has issued a note to clients saying the uncertainty created by last week’s Brexit vote would kill off economic momentum and plunge the UK into a “mild recession lasting three-quarters”.

On Friday it emerged that up to 2,000 jobs at investment bank Morgan Stanley could be moved from London to Dublin or Frankfurt following Britain’s vote to leave the EU.

Against this backdrop of turmoil, the Institute of Directors said only 23 per cent of its members viewed the past days’ developments as positive, while nine per cent thought it would make no difference.

With more than a third of respondents saying they planned to cut investment and five per cent expecting to shed jobs, the IoD said the results highlighted the scale of the unease triggered by the exit vote.

Around a quarter, 24 per cent, of respondents said they have frozen recruitment and thirty two per cent of said hiring would continue unchanged and some 22 per cent said they were considering moving operations from the UK, with only one per cent planning to return any.

The IoD said the Bank of England needed to ensure the effects of the turbulence in financial markets following the vote did not infect the wider economy it was lookin to ministers to minimise the impact on trade with EU countries.

Director general of the IoD, Simon Walker, said: “The overwhelming priority now for business leaders is that steps are taken to protect the economy from the negative reaction in financial markets… next comes securing a new trade arrangement.”

Accountancy firm BDO said it expects volatility in the financial markets and in the value of the pound to be short lived but the long term implications of the move will take years to filter through and it said most businesses simply don’t know how to proceed.

Martin Gill, head of BDO LLP in Scotland, explained: “The problem is that the prospect of the EU referendum vote was paralysing many businesses who didn’t want to do anything major because they were unsure of the outcome. Ironically now that the outcome is known many businesses find themselves unsure of what to do next as we are in uncharted territory.”

“Whilst nothing will happen in the short term (it is at least two years before the UK starts to withdraw from the EU) it is clear that many businesses will need to consider their position particularly if they have strong business links with the EU.”

Mr Gill continued: “Uncertainty over future tariffs, difficulties in cross border trading and in employment issues with EU nationals means that for many businesses they are facing issues they may have never encountered before.”

He went on: “The outcome of this vote may well be increased stability and financial security but, unfortunately, nobody can be certain of this and so Scottish businesses are likely to batten down the hatches and prepare for a prolonged period of change.”

Mr Gill explained: “The problem is that uncertainty over the EU referendum was not the only issue facing the Scottish economy. It was still struggling in terms of growth in many sectors.

“Manufacturing is experiencing a hefty dip in output while the obvious downturn in the oil and gas sector is casting a pall of gloom over many parts of that industry and those which serve either directly or indirectly. The hospitality sector in Aberdeen and the surrounding area remains subdued and is likely to be that way for some considerable time to come.”

Mr Gill concluded: “Scotland has always been an outward looking country and ambitious owners see markets across the world. This vote will require a rebalancing of businesses and the need to examine what effect this will have on day to day and long term operations in whatever sector they are involved in. Scotland needs a balanced economy, one that reflects the skills, the interests and activities of its population and its potential customers. It needs to be able to trade as widely and as effectively and with as few barriers to growth as possible. We need to support the home grown businesses while encouraging inward investment. We need to see the world as our market with Scotland as its base. While there is little doubt there is now greater uncertainty now is also a good time for reflection on where we were, where we are, and where we want to be.”