Of all the sectors we’ve surveyed this past 18-months, technology, media and telecomms (TMT) businesses have been the most consistently upbeat when it comes to their view on the short- and long-term impact of Brexit, such is its strength.
It’s of little surprise, however, that the 54 TMT-orientated business leaders surveyed in RSM’s latest quarterly Brexit Monitor, out of a total 308 middle market firms who took part, saw a dip in sentiment as we approach the final furlong of Brexit.
What is surprising perhaps is the extent of that dip. The difference is stark. Today’s sentiment represents the antithesis of yesterdays. The survey, conducted by YouGov, features its index, in which any reading above 100 shows that businesses are more optimistic than pessimistic. These last two quarters have seen sentiment within the sector drop from its highpoint as the country’s most optimistic sector when it comes to their own company’s short-term prospects. Just six months ago TMT sat pretty with 127 index points. Fast forward and today we see the sector languishing on 75 points, and comfortably the UK’s most pessimistic industry, according to RSM’s latest findings.
The long-term view is less downbeat. But when asked about their own company’s prospects over a five-year period post Brexit, the index score still sits in negative territory (98).
These readings don’t appear to correlate with a sector that is considered by many, particularly to those on the inside, to be almost immune to the prevailing winds of Brexit such is the strength of the market, its rate of growth and a fascinatingly bright future. But why the sudden change of heart from a sector that’s still considered to be the UK’s most robust performer? It would seem that certain realities are starting to bite.
David Blacher, partner and national head of TMT at RSM said: ‘The TMT sector has until recent months been brimming with confidence because it was, and in some quarters still is, felt that come what may, a sector with such high growth potential coupled with its ability to be agile, can effectively offset any impending shocks and better adapt to the new economic environment that awaits post-Brexit. But these latest findings do reflect a simmering nervousness within the market. The extent of continued political and economic uncertainty is enough to unsettle even the most robust quarters of the market.
What is of the greatest concern to TMT firms, and this may have had a bearing on our latest survey findings, is the ever more challenging search for talent, both into London and the UK regions, as well as into more traditional overseas outsourcing locations. The status quo on recruiting and retaining talent continues to worsen. We’re seeing firms looking further afield into lesser known overseas locations in their bid to bridge that gap.’
Another notable finding revealed that TMT is the only sector to consider US protectionist trade policies as a significant risk to their business. 28 per cent felt it posed a greater risk to their business than the UK exiting the EU.
David Blacher adds: ‘US private equity and venture capitalism is a major backer of UK tech start-ups, so these findings are consistent with a sector that relies on it.’
For further information, view RSM’s five-point plan on how to prepare for Brexit.