Majority of managers think Brexit uncertainty will affect UK economy

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Survey finds 65% pessimistic about economic growth though many optimistic their own organisations will thrive

A majority of managers in the UK believe Brexit-related uncertainty will hold back economic growth next year and almost half think leaving the UK will be a drag in the long term, according to a survey.

The 2017 outlook from the Chartered Management Institute (CMI) paints a relatively downbeat picture of the UK economy, but managers appear optimistic about their own organisations’ ability to thrive despite worries surrounding Britain’s exit from the European Union and the global climate as Donald Trump takes over the US presidency.

In a survey of 1,118 managers, the CMI found 65% were pessimistic about the UK’s economic outlook for the next 12-18 months. Their caution over 2017 followed what appeared to be a tough year for many organisations, when only 39% said they had grown, the lowest proportion since 2012 when the shockwaves from the eurozone debt crisis hit the UK economy. A further 39% said business levels had stayed roughly the same in 2016 and 22% said their business had declined.

Asked about the impact of Brexit on economic growth in the next three to five years, 49% thought it would be negative. But a sizeable 37% believed leaving the EU would have a positive impact on the UK economy and 14% said it would have no impact.

The findings follow signs that businesses are becoming more nervous about hiring and investing as Brexit negotiations approach. Companies and individuals have also become more concerned about costs because the pound’s sharp fall since the referendum has made imports such as fuel and food ingredients to the UK more expensive.

But the CMI poll, conducted in November and published on Wednesday, also showed a majority of managers, 57%, were confident about their organisations’ own prospects in the year ahead. Just 25% said they felt pessimistic. Managers in the private sector were more optimistic than those in the public and charity sectors.

The CMI’s chief executive, Ann Francke, said the results showed that despite uncertain times ahead there were still opportunities for “forward-thinking” UK businesses.

“Although it’s clear that there are significant challenges posed by the UK’s decision to Brexit, as a country we need to move forward and harness pragmatic positivity,” she said. Francke also called for employers to address the growing sense of frustration with the status quo and widespread inequality expressed by voters in the UK and elsewhere this year.

“In this climate of heightened political uncertainty and economic turbulence, the time is now to position Britain as a global leader in responsible capitalism, targeting essential issues like workplace ethics, inclusivity and executive pay to restore trust and transparency and improve productivity,” she said.

Managers said tackling the UK’s poor productivity performance was a priority in 2017 and that they wanted to improve economic efficiency by investing in technology, improving management skills and cutting bureaucracy.

Those surveyed also emphasised that the UK needed to invest in skills to boost its post-referendum prospects. Almost half, or 47%, said they fully supported the government’s apprenticeship levy, which comes into effect in April to help fund work-based training schemes.

Asked about Trump, who swept to power in the US on an anti-globalisation platform, 40% thought his election win would have an overtly negative impact on the UK. But 31% thought it would be positive for the UK.

A separate poll of employers published on Wednesday highlighted concerns about a fresh bout of economic turmoil when article 50 is triggered in 2017 to begin the process of leaving the EU.

The survey of 201 employers by the Recruitment & Employment Confederation (REC) found that four out of 10 respondents felt that formally notifying the EU of the UK’s intention to withdraw would make delays in business investment and hiring decisions more likely. But 12% believed delays would become less likely and 38% predicted no impact on investment and hiring.

There were also worries that triggering article 50 could intensify skills shortages, with 40% of employers saying EU nationals would become more likely to leave the UK, compared with 39% who saw no impact and 9% who believed they would be less likely to leave.

The REC chief executive, Kevin Green, said: “The prospect of EU workers leaving the UK at a time when employers are already facing severe skills shortages is particularly concerning because it’s a risk we cannot afford.

“We need EU workers in many sectors across the economy, from construction to hospitality to public services. The government must take steps to reassure EU nationals of their future in the UK.”

Posted on by CCKeith in Uncategorized
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