Middle market sentiment about the impact of Brexit dipped in the fourth quarter of 2017 according to the latest survey by leading audit, tax and consulting firm RSM.
The survey, conducted by YouGov, featured RSM’s Brexit Monitor index, in which any reading above 100 indicates that businesses are more optimistic than pessimistic. Sentiment about the impact of Brexit on the UK economy over a two-year period slipped from a positive showing of 102 in the third quarter of 2017 toward negative territory with a score of 94 in quarter four.
But the picture isn’t consistent across sectors. While the consumer and financial services sectors were the most downbeat about the impact of Brexit on their business over the next two years, scoring 81 and 87 respectively, TMT and construction were far more positive with scores of 114 and 126.
It is notable however that levels of optimism among all sectors bar construction have dipped, some more so than others. Whilst the TMT sector remains one of the more bullish, it still saw a marked drop from 132 in the previous quarter to 114.
Viewed over a five-year horizon, businesses are more optimistic about the economic consequences of Brexit, registering an average sentiment score of 104. Manufacturing and construction were the most upbeat with 123 points each, while the consumer sector trailed on 96 points.
The survey also highlighted some stark differences in attitudes across the UK. While businesses in Scotland (128), London (109), and the North West (106) have become more bullish about the short-term impact of Brexit on their businesses, sentiment dipped among companies in the Central (94), Yorkshire and the North East (82), and South regions (79). Viewed over a longer five year period, most UK regions saw it as having either no impact or a weak positive impact, with the exception of Yorkshire and the North East, and the South of England.
Simon Hart, RSM’s Brexit lead partner said:
‘While many businesses are understandably frustrated about the lack of certainty regarding our future trading arrangements, they remain relatively sanguine about the overall economic impact of Brexit over the longer term.
‘Middle market businesses are far more concerned about the short-term implications of Brexit, although this isn’t true across the board.
As the realities of the economic and political impact of Brexit start to emerge, different sectors and regions are observing consequences that will vary depending on how those fiscal and regulatory levers affect areas in which they operate. Consumer and financial services companies are most concerned while construction and TMT organisations remain bullish.
‘Clearly, many businesses will be relieved that the government has reached an agreement over the divorce settlement with the EU. However, it will be interesting to see if sentiment changes over the course of the year when trading negotiations start in earnest.’