Firms shrug off Brexit vote

Chambers raises forecast on ‘business as usual’

eu-referendumThe British Chambers of Commerce has raised its forecast on economic growth because of a “business as usual” approach by UK companies following the Brexit vote.

It now predicts 2.1% GDP growth this year, up from the 1.8% it forecast just three months ago.

But uncertainty over the UK’s EU relationship and higher inflation will “dampen medium term growth,” it says. It expects UK GDP to grow 1.1% next year, and 1.4% in 2018.

Its forecast coincides with a survey indicating that some of Britain’s biggest companies are committed to remaining in the UK despite the Brexit vote and a slump in confidence to its lowest for four years.

A survey of  FTSE 350 companies from ICSA the governance institute, finds boards deeply pessimistic about the economy, with 72% of respondents expecting economic conditions to deteriorate.

But they are firmly committed to remaining in the UK despite the decision to leave the European Union.

Two surveys on the Scottish economy also published today give contradictory views on business sentiment.

According to the Bank of Scotland/PMI survey the health of Scotland’s private sector worsened slightly during November, as firms reported the first contraction of output for three months. New order levels lowered, and survey data pointed to the first reduction in workforce numbers since June.

Nick Laird, regional managing director, Bank of Scotland Commercial Banking, said: “Business activity across the Scottish private sector weakened marginally in November, as reduced demand impacted the services sector in particular.”

But the Business Trends Report from accountants and business advisers BDO said business output in Scotland and the rest of the UK has risen for the first time after 17 months of decline.

Martin Gill, Head of BDO in Scotland, said:  This uptick in business output is a welcome boost during a turbulent time for Scottish businesses and the whole economy. However, businesses remain nervous during this period of Brexit limbo and this nervousness is a significant contributor to the slower rate of growth we are seeing.”

The biannual FT-ICSA Boardroom Bellwether survey canvasses the views of the 350 biggest companies on the London Stock Exchange. It found the following:

  • UK economy: Confidence is at its lowest since the surveys began in 2012. Only 8% of respondents anticipate an improvement in the next twelve months, down from 40% in December 2015
  • Global economy: Confidence is also very low with just 16% of respondents (unchanged from May 2016) anticipating an improvement in the next twelve months
  • Brexit: 59% rate Brexit as potentially damaging to their business, yet less than half (43%) see it as a principal risk. Only 1% of respondents are considering moving their head office from the UK to somewhere in the EU (92% are not)
  • Boardroom diversity:  Gender and ethnic diversity are down; worker representation on boards is unpopular (85% of respondents are against it)
  • Risk: Cyber risk remains the top risk for companies

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