Survey on EU exit
Fewer companies now rate Brexit as damaging to business
Campaigners say Brexit will be damaging, but more firms say they will cope (pic: Terry Murden)
Fears that Brexit will have a negative impact on business appear to be lessening with fewer companies now rating Britain’s departure from the EU as damaging, according to new research.
The biannual Boardroom Bellwether survey of FTSE 350 companies by the Chartered Governance Institute found that 3% of respondents view exiting as positive, the first time the survey has reported an expression of this sentiment since summer 2017 when 2% took this view.
Fewer companies rate an exit as potentially damaging (59% compared to 73% in winter 2018) and the number of respondents predicting no change for their business has increased from 28% to 38%.
UK PLC is also on the fence about the effect of a No Deal Brexit, with 40% believing it would be damaging, 40% believing it would not, and 20% unsure.
That said, the number of companies considering moving, or already having moved, a substantial part of their business from the UK to somewhere in the EU has increased – 12% as opposed to 4% six months ago and 3% a year ago.
The number not considering this option, but that already have an EU subsidiary, has risen from 25% in summer 2018 to 32%.
The data will raise questions about the more vociferous claims that Brexit will wreck the economy as companies indicate a greater level of preparation, even for a No Deal outcome. Prime Minister Boris Johnson said the government had made huge strides in its own preparatory work ahead of the 31 October Brexit deadline.
Mr Johnson’s comments come as MPs from other parties prepare to meet to discuss ways to avoid the UK leaving the EU without a deal on 31 October.
Labour leader Jeremy Corbyn hopes to win a vote of no confidence in the government and then delay Brexit to stop a No Deal exit.
Confidence in economy
The survey found that confidence in the UK economy is low with only 7% of respondents anticipating an improvement in the next 12 months and 69% predicting a decline – a slight improvement on winter 2018 when 2% predicted improvement and 81% predicted a decline.
Confidence is significantly lower than seen in the pre-EU Referendum survey of spring 2016 when just 24% of respondents expected a decline and 13% predicted an improvement. However, predictions about the outlook for companies’ own industries have rallied slightly with 43% predicting a decline (50% in winter 2018) and 35% predicting no change, up from 26% six months ago.
The majority of respondents (51%) predict a decline in global conditions, with just 10% predicting an improvement and 23% expecting conditions to remain the same.
The number of boards considered to be gender diverse has reached the highest level yet. Some 83% of respondents consider their boards to be gender diverse, up from 71% a year ago and almost two-thirds more than the 33% that believed so in winter 2016.
Just 8% consider that their board is not gender diverse, up from 21% in summer 2018. Ethnic diversity remains the most concerning issue with just 26% of respondents considering their boards to be diverse, similar to summer 2018 (25%) but down from 32% in winter 2018.
Cyber risk is no longer the top concern for British businesses. Now 69% of respondents consider their cyber risk exposure to be increasing, a sharp drop from winter 2018 (87%).
It might be that cyber risk is becoming less of an issue as 89% of respondents have increased their spending on mitigating it.
Whatever the reason, cyber risk was only chosen by 25% as the major factor causing an increase in risk exposure, with 28% of respondents opting for other concerns, 19% selecting global economic risks, 13% choosing geo-political tension and just 9% opting for Brexit.
Just 6% see climate change as a major risk, although 72% of the boards that responded to the survey have discussed issues relating to climate change at least once in the past year.
Remuneration committees now consider a variety of measures when deciding on executive pay. The number considering the pay ratio between the chief executive and the average employee has increased substantially.
Now 71% take this into consideration and just 29% do not, compared to 46% and 54% respectively a year ago.
Consideration of the gender pay gap has also improved: 68% take it into consideration compared to 37% a year ago.