UK businesses’ appetite for financial risk falls due to Brexit fears

Keiligh Baker's picture

Major British businesses’ appetite to take on financial risk has fallen to its lowest level in nearly a decade due to fears of “the hardest of Brexits”.

A survey by accountancy firm Deloitte showed on Monday that while the UK, the world’s fifth-largest economy, is less than eight weeks away from leaving its biggest trading partner, the European Union,  big business groups are getting the jitters.

Without a deal, businesses fear that major delays at ports for customs and other checks will disrupt supply chains and even lead to shortages of food and other essentials.

“Corporates are positioned for the hardest of Brexits, with risk appetite at recessionary levels and an intense focus on cost control,” Deloitte’s chief economist, Ian Stewart, said.

Businesses are not just afraid of short-term disruption: 78 percent of the 110 companies surveyed by Deloitte said they expected Brexit to damage the economy over the long term, compared with just 10 percent who expected an improvement.

Less than 10 percent of chief financial officers surveyed in the Deloitte survey said now was a good time to take greater risk on to their balance sheets, the lowest in over nine years.

Brexit was identified as the top risk, followed by trade wars triggered by U.S. protectionism and broader weakness in British domestic demand.

The Deloitte survey polled chief financial officers from major UK-listed companies with a combined market value of £390 billion, as well as UK subsidiaries of large foreign firms, between Jan. 8 and Jan. 24.