Brexit Monitor. Results. October 2018

Transcription

1 Brexit Monitor Results October 2018

2 Brexit Monitor How is the middle market faring as the enters one of the most uncertain and volatile operating environments since the global economic collapse? RSM s Brexit Monitor offers a snapshot of sentiment as the prepares to leave the EU. Methodology The survey, carried out by YouGov is based on 325 interviews with C-suite respondents from middle market firms (with turnovers between m) across manufacturing (54), financial services (51), technology, media and telecoms (51), construction (55), consumer (55) and other markets (59). There were at least 30 respondents in each region: London, South, Central, North East & Yorkshire, North West and Scotland. Fieldwork was completed between 20 August 2018 and 13 September Chart percentages may exceed 100 per cent due to rounding.

3 Summary This quarter, the RSM Brexit Monitor shows middle market leaders have grown concerned about what Brexit means for their prospects over the medium and long term. Their earlier confidence that they could weather Brexit volatility now seems to have faltered, as the ongoing negotiations and uncertainty take their toll. Despite an already volatile operating environment, many believe the biggest impact of Brexit is still yet to come. Positivity has started to wane sentiment about and economic prospects over the next two and five years has dropped over the past quarter. Decision makers expect Brexit to have the biggest impact on their within the next year. Confidence is down in all industries all sectors have grown more pessimistic about the impact of Brexit on their two-year and five-year prospects. All regions have become less confident about the impact of Brexit on the over the next two years.

4 Q What effect do you believe the exiting the EU will have on each of the below over the next five years? : all sectors Strong positive effect 200 My company 122 No effect Strong negative effect 0 May - June 2017 Aug- Sept 2017 Nov - Dec2017 Feb - March 2018 May - June 2018 Aug - Sept 2018

5 Q Thinking about the s decision to leave the European Union, when, if at all, do you expect it to have the largest impact (positive or negative) on your? set to begin Brexit transition Largest impact has already happened November 2018 Within the next 3 months February 2019 Within the next 6 months August 2019 February 2020 Within the next Within the next 12 months 18 months August 2021 Within the next 24 months In 2 years or more 13 % 14 % 2 22 % 11 % 7 % 4 % 7 % Not applicable - the leaving the European Union will have no impact on my 3 % Not sure

6 Q What effect do you believe the exiting the EU will have on each of the following over the next five years? Results and index: by sector Manufacturing Financial services 32 % 18 % 18 % 11 % % 25 % 18 % 15 % 31 % % 13 % 2 15 % 23 % 26 % % 16 % 29 % 26 % 21 % 113 Technology, media, telecoms Construction 14 % 22 % 2 24 % 21 % % 16 % 36 % 14 % 2 13 % % 4 % 19 % 12 % 23 % 15 % % 16 % 33 % 18 % 9 % 18 % 109 Strong positive Weak positive No effect Weak negative Strong negative Don't know

7 Q What effect do you believe the exiting the EU will have on each of the following over the next five years? Results and index: by sector Consumer Other 2 % % 27 % 19 % 92 1 % 28 % 16 % 4 % 28 % 24 % 18 % 14 % 19 % 13 % 35 % 95 1 % 24 % 14 % 22 % 25 % 14 % Strong positive Weak positive No effect Weak negative Strong negative Don't know

8 Q What effect do you believe the exiting the EU will have on each of the following over the next five years? Results and index: by region London South 24 % 22 % 8 % 24 % 22 % % 15 % 2 22 % 33 % % 2 22 % 14 % 2 21 % % 9 % 2 33 % 26 % 120 North West North East and Yorkshire 9 % 22 % 16 % 26 % 28 % % 16 % 16 % 24 % 16 % 26 % 95 2 % 7 % 24 % 2 15 % 33 % % 14 % 34 % 18 % 2 94 Strong positive Weak positive No effect Weak negative Strong negative Don't know

9 Q What effect do you believe the exiting the EU will have on each of the following over the next five years? Results and index: by region Central Scotland 9 % 28 % 19 % 18 % 26 % % 12 % 2 11 % 3 23 % 84 4 % 23 % 18 % 24 % 31 % % 26 % 19 % 26 % 3 % 22 % 82 Strong positive Weak positive No effect Weak negative Strong negative Don't know

10 Q What effect do you believe the exiting the EU will have on the over the next Results: two years Strong positive effect Weak positive effect 18 % No effect Weak negative effect 13% 24 % Strong negative effect Don t know 1 % 23 % 21 % Strong positive Weak positive No effect Net negative result -3 % Weak negative Strong negative Don't know Results: five years Strong positive effect Weak positive effect 22 % No effect 13 % 23 % Weak negative effect Strong negative effect Don t know 1 % 16 % 24 % Strong positive Weak positive No effect Net positive result +4 % Weak negative Strong negative Don't know

11 Q What effect do you believe the exiting in the EU will have on the over the next two years? Results: by region Strong positive effect 2 + Weak positive effect 6 to19 % No effect -5 to 5 % -39 % Weak negative effect -6 to -19 % Strong negative effect -2 + NET scores +1 % +5 % %

12 Q Thinking about a potential Second Referendum on the terms of the s exit from the European Union, which of the following best represents your thinking? 27 % Our is fully in favour of it 33 % Our would broadly welcome it 22 % Our would have no view on it 9 % Our would not welcome it 7 % Our would strongly oppose it 2 % Don t know / Not been discussed

13 Summary Middle market leaders are becoming increasingly pessimistic that the government will secure a good deal with Brussels. Confidence levels dropped 10 percentage points over the past quarter the biggest decline we ve seen so far. Business sentiment hints of more uncertainty to come: the RSM Brexit Monitor shows many middle market leaders would back a second referendum. Many are also taking steps to prepare their es for a no deal scenario. Just 39 per cent of es think the government will secure a good deal with Brussels down from 49 per cent last quarter. Scottish es are most pessimistic about the likelihood of a positive deal outcome. There is strong support for a second referendum on the terms of Brexit 60 per cent of middle es would back this option. Businesses are preparing for a no deal scenario. Many have already sourced extra working capital or set aside a contingency fund. Looking ahead, many are considering relocating operations, increasing prices and moving jobs abroad.

14 Q What impact, if any, would the exiting the European Union in March 2019 having failed to negotiate a deal, have on your expected turnover? 6 % Advantageous +25 % or more 29 % Favourable +6 to +24 % 32 % Neutral -5 to 5 % 23 % Harmful -6 to -24 % 5 % Catastrophic -25 % or more

15 Q How confident are you that the s delegation, negotiating the country s exit, will achieve a good deal with the EU? Results: all % 44 % 54 % 49 % 39 % 35 % 21 % 22 % 18 % 16 % 0 Aug- Sept 2017 Nov - Dec 2017 Feb - March 2018 May - June 2018 Aug - Sept Net confident (7-10) Net unconfident (0-3)

16 Q How confident are you that the s delegation, negotiating the country s exit, will achieve a good deal with the EU? NET: Confident (by sector) % 46 % 44 % 43 % 29 % 0 Aug- Sept 2017 Nov - Dec 2017 Feb - March 2018 May - June 2018 Aug - Sept Manufacturing -8 % Financial services -8 % Technology media, telecoms -3 % Construction -22 % Consumer -13 %

17 Q How confident are you that the s delegation, negotiating the country s exit, will achieve a good deal with the EU? NET: Confident (by region) % 41 % 39 % 3 22 % 0 Aug- Sept 2017 Nov - Dec 2017 Feb - March 2018 May - June 2018 Aug - Sept London -5 % South +3 % Central -11 % North West -12 % North East and Yorkshire -4 % Scotland -36 %

18 Q Thinking about a No Deal scenario where the Government fails to negotiate a deal with the European Union, which of the following actions, if any, have you... Taken Considered taking 24 % Stockpiling 27 % 33 % Sourced additional working capital funding 25 % 2 Relocated operations 32 % 29 % Increased prices 32 % 2 Moved jobs abroad 32 % 3 Adjusted supply chains 27 % 27 % Currency hedging 23 % 34 % Set aside contingency fund 27 %

19 Q Thinking about a No Deal scenario where the Government fails to negotiate a deal with the European Union, which of the following actions, if any, have you... Taken Considered taking Currency hedging 37 % Sourced capital 33 % Adjusted supply chains 31 % London 43 % Move jobs abroad 37 % Contingency fund 36 % Relocate ops Increased prices 34 % Moved jobs abroad 32 % Relocated ops 31 % South 34 % Source capital 27 % Supply chain 26 % Contingency fund Contingency fund 45 % Increased prices 34 % Adjusted supply chains 32 % Central 31 % Currency hedging 28 % Increase prices 27 % Supply chains Sourced capital 44 % Contingency fund 36 % Adjusted supply chains 29 % North West 43 % Relocate ops 4 Increase prices 35 % Contingency fund Contingency fund 4 Sourced capital 39 % Adjusted supply chains 34 % North East and Yorkshire 37 % Relocate ops 31 % Increase prices 3 Move jobs abroad Contingency fund 33 % Stockpiling 28 % Sourced capital 26 % Scotland 39 % Increase prices 32 % Relocate ops 3 Move jobs abroad

20 rsmuk.com The group of companies and LLPs trading as RSM is a member of the RSM network. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction. The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number ) whose registered office is at 50 Cannon Street, London EC4N 6JJ. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug. RSM Corporate Finance LLP, RSM Restructuring Advisory LLP, RSM Risk Assurance Services LLP, RSM Tax and Advisory Services LLP, RSM Audit LLP, RSM Consulting LLP, RSM Employer Services Limited, RSM Northern Ireland () Limited and RSM Tax and Accounting Limited are not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. RSM Legal LLP is authorised and regulated by the Solicitors Regulation Authority, reference number , to undertake reserved and non-reserved legal activities. It is not authorised under the Financial Services and Markets Act 2000 but is able in certain circumstances to offer a limited range of investment services because it is authorised and regulated by the Solicitors Regulation Authority and may provide investment services if they are an incidental part of the professional services that it has been engaged to provide. Baker Tilly Creditor Services LLP is authorised and regulated by the Financial Conduct Authority for credit-related regulated activities. RSM & Co () Limited is authorised and regulated by the Financial Conduct Authority to conduct a range of investment activities. Whilst every effort has been made to ensure accuracy, information contained in this communication may not be comprehensive and recipients should not act upon it without seeking professional advice RSM Group LLP, all rights reserved 5719