Brexit shock eases

“The Brexit shock that hit corporate spirits last June has eased. Optimism among CFOs has hit an 18-month high and uncertainty has fallen from a post-referendum record high to levels last seen in early 2016.

“Brexit still tops the risk list, although at a lower reading than the last two quarters. CFOs believe the Brexit headwinds have eased and see far less damage to their spending plans than earlier expected. While most still see Brexit having an adverse effect on the business environment, even here the degree of negativity has fallen.

“Crucially, two longstanding sources of risk - concerns about weakness in emerging markets and the euro area - have fallen significantly. The decline in concern about the euro area is the largest recorded for any risk factor, indicating growing confidence about Europe’s recovery.

“A more stable environment has bolstered corporate risk appetite and a laser-like focus on cost control and building cash flow has softened, with more weight placed on capital spending and expansion.”

Ian Stewart, UK chief economist

“The UK’s exit from the EU is a long and uncertain process and business sentiment is changeable. But it is clear from this survey that the UK corporate sector enters the negotiation phase of Brexit in far better spirits than seemed likely in the months after last year’s referendum vote.

“Businesses will hope that the UK can secure the best possible deal on trade and market access, but must continue to plan for an exit in 2019, several years of trade negotiations, and a transitional phase to bridge the two. For many businesses, including our own, access to skills is one of the most pressing issues they face. I believe mobility of people should be as high a priority as trade in the future negotiations. If we are to maintain the UK’s status as an open and thriving economy we must retain the diversity of skills that has helped our nation flourish.”

David Sproul, senior partner and chief executive at Deloitte