Business confidence is unpredictable and fickle, but it is essential to economic and social stability. Just at this moment it is also hard to ignore.
Who knew that the UK economy would respond with such resilience, some might even say gusto, to the vote to leave the EU? It may not be universal, but optimism abounds in the midst of uncertainty. British business knows all too well that the alternative – pessimism –represents a self-fulfilling prophecy.
On 1st November the CBI published its quarterly trends survey for the period July to September. It reported that whilst 21% of small and medium-sixed businesses were less optimistic about the state of the UK economy, 25% were more optimistic, a net positive balance of plus four.
The survey of 423 companies also found that output was showing a positive balance of plus 10% during the same period, with firms predicting a similar picture in the next quarter (plus eight%). Optimism over export prospects also grew at the fastest rate since April 2014 and showed a positive balance of plus 24%.
This was matched by an improvement in investment intentions as the CBI’s chief economist explains: “Smaller manufacturers are increasingly confident about their export prospects as they continue to reap the benefits of a weaker Pound. Setting the right environment for firms to innovate and invest must be at the heart of the Autumn Statement.”
At our own inaugural Brexit Forum held in October it was a similar story. Before hearing from a panel of speakers, which included representatives of a large bank and the IoD as well as a local MP and a long-standing successful client of ours, we asked delegates about their confidence levels. 72% felt confident about the economy over the next 12 months. After the speeches we asked the same question again and confidence levels had risen by one-tenth to 79%. More than this, 84% felt confident that Britain would thrive outside the EU.
The purpose of the forum was to discuss not only the threats and risks posed by Brexit (after all, optimism is best taken with a pinch of realism), but more importantly the opportunities.
A consensus was quickly established that the prospect of leaving the EU presented Britain with a new platform from which it could project to the world that it is open for business.
Naturally, the biggest concern (to 64% of delegates) was losing access to the single market; however, the most prominent benefit of Brexit was the potential for free trade deals (70%). So even in the face of uncertainty, our audience found cause for optimism.
Not surprisingly, perhaps, 71% of attendees were in favour of a soft Brexit rather than hard and it seems certain that the Government will pursue a middle course, or ‘smooth Brexit’. Whichever it is, our local MP - speaking on behalf of his constituents - highlighted the sheer complexity of the process associated with our withdrawal. He urged everyone to lobby their MPs to ensure not only that the interests of business are protected against the long-term implications, but also to maximise the opportunities that a post-Brexit landscape may generate.
Whether Brexit really will mean Brexit, nobody yet knows. Time will tell. In addition to the High Court challenge, powerful groups within the EU are lobbying hard to persuade key European leaders to find terms on which Britain can remain. But the US election result may yet weaken the EU’s position with further elections in the Netherlands and France due next year, not to mention a constitutional referendum in Italy next month.
For our part, we will continue to monitor things closely with a view to running a series of Brexit Breakfasts in 2017. Taking a lead from our clients and professional contacts, our glass is more than half full and we are embracing the changing landscape positively. We look forward to providing the support our clients need during this period of challenge and opportunity.
As somebody put it rather succinctly at the recent middle market ‘Business after Brexit Forum’ held by The Economist: “If you have a decent product and you are prepared to keep investing and innovating, you’ll be fine.”
In this edition we take a look at the key areas which are most likely to be affected by Brexit, from intellectual property to commercial property, from construction to international trade, and from employment law to the impact on “non-doms”.