Business gloom grows as Brexit reality draws near

10 December 2018

Levels of pessimism are up, investment is down, while the struggle to find good people intensifies

Britain’s business leaders are braced for an extremely difficult 2019 as the reality of Brexit hits. The sixth annual Eden McCallum economic outlook survey of 192 senior business leaders has found that optimism is currently in very short supply.

A few key findings from this year’s survey:

  • Overall, 82% of respondents are either “pessimistic” or “very pessimistic” about the UK’s economic outlook over the next 1-2 years; 27% of respondents are very pessimistic (up from 17% this time last year)
  • 83% think that leaving the EU will be bad for Britain
  • 38% are holding back on investment in the UK
  • 61% are finding it harder to recruit non-UK European talent
  • 54% of respondents (polled before his latest intervention on the Brexit deal) thought President Trump would have a bad impact on the UK economy

The Eden McCallum economic outlook survey has found that an already troubled business community is feeling even less hopeful than it was this time last year.

Those feelings are not focused solely on the UK: respondents are also more pessimistic about prospects in the eurozone than previously. Over half (51%) are pessimistic about the economic outlook in the eurozone over the next 1-2 years, compared with 26% in 2017 – a doubling in pessimism in just 12 months. A eurozone crisis is now expected by 71% of respondents, up from 51% a year ago.

Digging a bit deeper into attitudes towards Brexit, the survey found that 52% of respondents thought it would be bad for their company (only 6% thought it would be good), and 83% thought it would be bad for the UK economy.

Of course, businesses continue to adopt a range of responses in these circumstances. While some are clearly holding back on investment and experiencing a talent shortfall, others feel able to say it is still business as usual as far as they are concerned. 61% are finding it harder to recruit non-UK European talent.

The median view among the almost 200 senior business respondents was that Britain will experience a pretty hard form of Brexit in terms of restrictions on the free movement of people and of services, with expectations for the free movement of capital and goods somewhat softer.

Dena McCallum, co-founder of Eden McCallum, says: “Our survey this year points to a growing sense of pessimism about the prospects for business in the coming year. It is a real concern that the mood in the boardroom is as downbeat as our survey suggests.”

 

At the same time, a survey of 193 businesses in the Netherlands has revealed an even bigger “mood swing” compared with a year ago. Today 35% of Dutch businesses are pessimistic about prospects for the Eurozone, up from only 7% a year ago. 84% of Dutch respondents think Brexit will be bad for the EU (79% of UK businesses feel the same way).

However, Dutch business feels slightly less threatened by Brexit than UK firms: 39% think it will be bad for their business as opposed to the 52% figure in the UK.

The global situation is also a cause for concern. 30% of UK respondents are pessimistic about the global outlook, compared with 16% last year. Nervousness has spread even more rapidly in the Netherlands, with pessimism about the global outlook up to 34%, compared to 7% a year ago.


Eden McCallum’s Economic Outlook Survey

Eden McCallum’s survey was conducted online with their clients and other business leaders between 19th and 26th November 2018, and at the same time of year in the previous 5 years. In 2018 there were 192 respondents to the UK survey. 92% of respondents are Chairs, CEOs/MDs, Board Directors, Divisional Directors, VP/Partners, or Heads of function, within publicly-listed companies (37% of respondents), privately-held companies (51%), and other types of organisation (12%).