Brexit transition boosts business confidence

“Business confidence has edged up and is running not far off its long term averages. CFOs’ have shrugged off weakness and volatility in equity markets with perceptions of uncertainty dropping to the lowest levels since spring of 2016, before the EU referendum.

“We see a clear divide in the balance sheet strategies of CFOs in companies focused on the UK and those focused internationally. Those CFOs in businesses with a major international revenues report a clear focus on expansion, including capital spending and moving into new markets. Their counterparts in businesses focused on the UK are operating more defensively, prioritising cost control and cash conservation.”

Ian Stewart, chief economist at Deloitte

“The Brexit transition deal seems to have had a positive effect on the corporate mood with a clear uptick in optimism and risk appetite between those responding to our survey before and after the news from Brussels.

“Brexit remains a major concern for UK CFOs, though one which, in the wake of the announcement of the transition deal, has eased. Concerns about the dampening effect on corporate spending plans remain, but they have softened. Importantly, for the first time in two years, CFOs do not see Brexit as the main risk facing their businesses.

“The effect of the transition deal underscores the sensitivity of sentiment to developments in the Brexit negotiations. The moment of truth on Brexit is approaching. The UK government hopes to strike a deal with the EU and have it endorsed by Parliament by xxx. Whether it does so will be the main driver of business confidence for the rest of this year.”

David Sproul, senior partner and chief executive at Deloitte