Middle market leaders are cautiously optimistic that economic and business prospects will still be bright after the UK leaves the EU. Many are confident that they will not just survive volatility, but emerge from Brexit stronger.
RSM’s Brexit Index shows decision makers expect Brexit to have a weak positive effect on their business over the next five years. Sentiment reached 109 on a scale of 0 to 200 (where 0 represents a strong negative effect, 100 no effect and 200 a strong positive effect).
While businesses are only just hovering above the positive side of the line, optimism is up three points from last quarter. Organisations appear comforted by the early talks in Brussels and the little detail that has emerged so far.
There will of course be winners and losers. Manufacturing firms are most optimistic, with an index score of 126. TMT companies closely follow at 122. But construction and consumer businesses are in negative territory, scoring just 99 and 91 respectively.
Despite their different outlooks, all sectors are taking steps to manage Brexit risks. There is still much to do, however - half of businesses (48 per cent) have completed no more than a third of the actions they think they need to take to prepare.
Many have started by looking for quick wins - taking measures to boost productivity and efficiency tops the list (30 per cent) of actions taken so far.
We’re seeing businesses relook at their EU supplier contracts (28 per cent) and make adjustments to protect themselves from future import and export duties with the EU (27 per cent).
Businesses also recognise that any changes to freedom of movement rules will have far-reaching effects. A total of 28 per cent have already reviewed existing EU workers’ status across their business. A similar proportion (30 per cent) has reviewed immigration and employment legislation in preparation of hiring EU workers.
Now these early activities are underway, decision makers are starting to look at the bigger picture. Thoughts are turning to how to guarantee future access to the EU, with 16 per cent looking to set up EU subsidiaries or branches to secure their position.
Horizons are also broadening: the decision to leave the EU has prompted 25 per cent of middle market leaders to expand or look to expand into non-EU markets. It would seem that Brexit isn’t just seen as a challenge, but an opportunity to do things differently.
RSM Brexit partner Simon Hart says business optimism is alive and well. ‘Decision makers are aware of potential bumps in the road, but many are bold enough to get on with business growth, expansion and success.
‘I’m reminded of a conversation I overheard on the Tube this week, when a business professional said, “In my company we’ve learnt to fear everything but be scared of nothing”. It appears that the UK middle market agrees.’