ICAEW: Businesses not planning proactively after Brexit

Wednesday 30 August 2017

Companies are not proactively planning for the fallout of Brexit, according to the Institute of Chartered Accountants in England and Wales (ICAEW). 

The group found that the combination of a snap general election, a hung parliament and the slow progress of Brexit mean companies are turning to a more cautious approach. 

As well as this, figures show that the Business Confidence Index is in negative territory, dropping from 6.7 in the second quarter to -8 in the third quarter. These are similar levels to the first quarter of 2017 (-8.7). 

GDP growth for the third quarter is forecast at 0.2 per cent, dropping slightly from the 0.3 per cent recorded in the second quarter. Input prices are also expected to continue rising at 2.5 per cent year-on-year. 

The figures also showed that household incomes will carry on tightening as companies hope to control overall cost increases by maintaining wage growth to a rate lower than inflation.

Matthew Rideout, ICAEW director of business, said: “The fall back into negative territory is not unexpected. Since the announcement of the general election, a vacuum has been left with Government’s attention swallowed by a hung parliament and the start of EU negotiations. 

“The industrial strategy has been lost in the void, coupled with  no clear signal towards post-Brexit policy.”

Mr Rideout explained that companies cannot see through the “haze of uncertainty”, and are finding it difficult to look further than the end of the next quarter when it comes to decision making.

He advised companies to invest in talent and new products and services, while exploring markets to guarantee they are positioned to capitalise on opportunities when the UK leaves the EU. 

What’s more, 24 per cent of businesses admitted that a shortage of non-management skills is a bigger challenge to their company than a year ago.

While the figures suggest an uncertain business climate, many professionals are shunning full-time roles in favour of self-employment. 

This was highlighted in a study from the Creative Industries Federation (CIF), which found that the creative control offered by freelancing helped to make a huge difference to people’s job satisfaction.

With freelancer and contractor accountants available to assist with tax legislation, it’s easy to see why self-employment is proving to be an attractive option for professionals. 

By Victoria McDonnell

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