Finance Directors’ Survey 2016: Freedom to hire EU nationals is top priority for UK FDs post-Brexit
The ability to hire EU nationals for roles in the UK comes ahead of access to the European single market and a free trade agreement as the number one priority for UK Finance Directors in post-Brexit Britain, according to our survey.
More than 100 FDs and CFOs took part in the survey, commissioned by The CA magazine (the magazine for ICAS chartered accountants) in partnership with law firm DLA Piper, which ranked a trade agreement with the EU as the fourth priority for Brexit negotiators to consider, while access to the European single market ranked sixth.
A downturn is predicted
There has been a major shift in confidence surrounding the future of the economy among business and finance leaders. Almost half (45%) of those surveyed said that they predict the UK will experience an economic decline over the next 12 months; a dramatic upwards spike when compared to the 6% of respondents who held this view in 2015. A further 41% believe that growth will be flat or negligible for the remainder of this year.
FDs working at companies with a turnover of more than £100m were the most pessimistic on growth, with 48% stating they believe the economy will slump in the next 12 months.
Future of UK/EU relations greatest barrier to growth
The absence of a definite Brexit timetable coupled with the uncertainty surrounding what kind of deal the UK will secure with the EU upon its exit were rated the biggest barriers to growth. Political factors in the UK were rated as the second most significant barrier.
As a result, nearly a quarter (23%) of respondents said that they are considering delaying investment in the UK or cutting it all together. Staffing levels are expected to take a hit as a result of the Brexit vote, with 14% of FDs reporting they are considering cutting the head count at their organisation, and a further 9% are already doing so.
There has been a great amount of speculation regarding companies moving their operations out of the UK to the EU as a result of the vote. Although 15% of business leaders said that they are considering a move, none reported that they are currently making one. This may indicate a ‘wait and see’ attitude among the business community in the run up to UK/EU negotiations.
Innovation and currency exchange rates are rising concerns
FDs are increasingly concerned with ensuring their organisation is bringing new products and services to the market, with the need to innovate ranking fourth on the list of the top 10 issues for FDs (up from seventh place last year).
Controlling costs, growing revenues and staff recruitment and retention remain the main priorities, placing first, second and third again this year.
Recent market volatility and rippling effects for the pound may be two contributory factors causing concerns about currency exchange, which moved into the top 10 for the first time as the sixth priority for FDs.
Almost three quarters (74%) of those surveyed said that Brexit will create new challenges for their organisation going forward. Conversely, 28% believe Brexit will create new opportunities. Regulatory burdens are expected to remain a challenge for FDs, with 42% saying that Brexit will not provide any opportunity to reduce them.
Advisory firms could reap rewards of Brexit
There are a great number of unknowns surrounding what Brexit could evolve into over the next few months and years. As in any time of uncertainty, businesses will be turning to experts for guidance, which is what 24% of survey respondents said they are considering; a further 17% say they are currently working with Brexit consultants.
Anton Colella, ICAS Chief Executive, said: “The UK’s finance leaders have sent a strong and clear message on their priorities to the government’s Brexit negotiating team - British business relies on Europe for its talent pool.
“The freedom to hire and retain talented people from around Europe must therefore be a crucial part of the government’s Brexit negotiations.
"We are already hearing anecdotal evidence that some EU Nationals may be thinking about moving their careers out of the UK. This is a key risk to British business and one that the Government needs to address."
Simon Rae, Managing Partner of DLA Piper in Scotland, said: “Looking at the results of this survey, it’s no surprise that political uncertainty is top of Finance Directors' list of barriers to growth, with general feelings of political uncertainty intensified by concerns about what the UK’s relationship with the EU might look like in a post-Brexit Europe.
“In the year ahead, we’re expecting to see renewed interest in innovation, as businesses strive to remain competitive by bringing new products and services to market coupled with the careful management of costs.
“Only time will tell but, as things stand, 45% of FDs surveyed this year expect the economy to decline in the next 12 months - by comparison, only 6% held that view a year ago.”