Confidence among middle market businesses about the long-term impact of Brexit could be starting to gather pace for the first time since the EU referendum, according to the latest YouGov survey, the Brexit Monitor, commissioned by leading audit, tax and consulting firm RSM.
RSM’s Brexit Monitor index, in which any reading above 100 indicates that businesses are more optimistic than pessimistic, showed that sentiment about the impact of Brexit on the economy over a five-year period rose from an index score of 104 in the last quarter, to 112, the most considerable rise since the survey began nearly a year ago*.
The quarterly survey of more than 300 UK middle market business leaders also revealed that firms are more confident about the UK government securing a ‘good deal’ than at any point since the survey began. 54 per cent of respondents were confident** of the UK securing a good deal, three times the number of those who weren’t (18 per cent).
Overall business sentiment appears to contradict recent fears that the UK government is losing ground in its bid to secure a deal that is in the best interests of the UK.
Simon Hart, RSM’s Brexit lead partner said: ‘When we first ran this survey in June last year, opinions on the long-term impact of Brexit were very polarised. However, the clear trend that has emerged over the course of the past year is that a sense of optimism is now building.
Despite the challenges that EU negotiations continue to present, and the uncertainty surrounding our future trading relationships, an agile and pragmatic middle market also appears to be gaining confidence in the government’s ability to deliver a good deal.'
Businesses in Scotland remain the most optimistic in terms of the likely impact of Brexit on their own company over the short term (121), but it was the Midlands that saw the strongest surge in sentiment rising from negative territory (94) in the last quarter, up to the most optimistic region bar one, on 120.
Over the course of the survey, companies in the Southern region have seen a marked decline in confidence over their own longer-term prospects. They’ve dropped from the most optimistic region (116), to become the UK’s stand-out pessimist (95).
Whilst the technology, media and telecommunications (TMT) sector stands out as the most consistently upbeat in terms of the likely impact of Brexit on their company’s prospects over both the short and long term, it is the manufacturing sector that presents the most telling trend over the course of the survey. Manufacturers have displayed a steady decline in sentiment regarding their own prospects, dropping from the second most optimistic (115) to the penultimate pessimist in the short term (100). The longer-term picture also sees the sector drop from the most optimistic sector (117) to the least optimistic bar one, yet still in positive territory (108).
Middle market companies would like to see the UK form strong partnerships with the US (31 per cent), France (28 per cent) and Germany (27 per cent), with China (19%) and Spain (11%) also featuring in the top five preferred partners.
Around half would open a subsidiary or branch in either Germany (53 per cent) or France (48 per cent) if they were to open in Europe, with Spain, Italy and The Netherlands also featuring prominently.
*The survey was taken prior to the UK government securing the transitional EU-exit deal in March.
**Respondents were asking to rate their confidence on the UK’s prospects of securing a good deal on a 0-10 scale, where 0 is ‘very unconfident’ and 10 is ‘very confident’.