Ken McHattie CA, ICAS President: The dangers of uncertainty
Politicians are playing a risky game of political Jenga with our economic future, warns ICAS president Ken McHattie.
Of the main economic ills, uncertainty is the most debilitating. At best, businesses defer decisions. At worst, they cancel investment and shelve hiring plans. It is usually easier to stand at the side of the pond and stay dry than to take a leap into uncertain and troubled waters.
Right now, governments in Westminster and Holyrood need to do all they can to provide business with what could be termed benign certainty – no shocks, and reasonable assurance over the tax and regulatory landscape.
It is, therefore, disappointing that instead of taking steps to create such conditions our politicians appear more keen to allow uncertainty to become the new certainty.
It reminds me of playing Jenga, the clever game where blocks of wood are used to build a simple but stable structure. The players then remove blocks in turn until sooner or later, depending on their skill and nerve, what remains collapses, leaving the structure to be rebuilt.
Such an approach to economic affairs is neither wise nor clever.
It is against this background that we have conducted the latest ICAS Finance Directors' Survey. The results must be food for thought for the UK and Scottish Governments.
ICAS finance directors believe that political uncertainty is the greatest single barrier to growth over the next year. They told us that the single most important issue in negotiating Brexit, ranking above access to the single market, will be the ability to continue to freely hire the best available talent.
Any restrictions the government may wish to impose on the free movement of EU workers must properly address this point. A well thought-out visa system which allows businesses to recruit talent from around Europe and around the world is a top priority for Westminster.
The general mood is rather gloomy. 45% of the FDs surveyed believe we are facing a downturn or worse. 23% are considering delaying or cutting investment in the UK. 9% are in the process of reducing UK headcount. 15% are thinking of transferring activities elsewhere in the EU.
So what is ICAS going to do to influence where we go from here? Well, quite a lot, starting with representations at the highest levels of Westminster and Holyrood to ensure that politicians are clear about the issues businesses are facing.
We are creating an ICAS Brexit Advisory Group, which will be chaired by Mike McKeon, formerly CFO of Severn Trent. The Group will include Council members, public interest members and former politicians to ensure that a suitably broad range of opinion is represented.
We have also arranged the first of several ICAS Insight Breakfasts in London, Edinburgh and Glasgow to hear expert analysis and allow CAs to share their thoughts. And we have turned over a substantial part of the September edition of the CA magazine to Brexit issues as we hear from senior CAs representing a wide range of businesses.
The FD survey provides food for thought well beyond the UK and EU. I suspect there are few places in the world where businesses have the luxury of stable governments enacting consistent and predictable long-term policies. Disappointingly, we must add to the list of challenges facing the profession; the task of persuading governments to develop policies, implement them and stick to them. Radical stuff indeed.