1 in 5 firms unable to operate as usual in 2019 if no transition deal agreed
A survey of 280 CEOs and CFOs from medium and large size UK companies commissioned by KPMG reveals that legal certainty on transition agreed quickly is of greater value to business than a more comprehensive future deal agreed later on. In the survey 68% of CEOs and CFOs said they would prefer legal certainty on transition by April 2018 with a less ambitious future deal, rather than a more comprehensive future deal not agreed until much later.
Commenting on the findings James Stewart, Head of Brexit at KPMG UK said:
“Whether business leaders see Brexit as a burden or a great British opportunity, most regard certainty around transition as one of the fundamental building blocks for growth. Whilst the public is more fixated on the final deal, the CEOs we’re speaking to are often willing to accept a more modest deal in exchange for certainty so they can make investment decisions now.”
Elsewhere in the survey 1 in 5 (20%) CEOs and CFOs said their firms will not be able to operate as usual in March 2019 if there is no transition deal. This would extrapolate to thousands of businesses across the UK. However when asked what their business’ situation will be if the UK and EU do not reach a ‘steady state’ transition agreement by April 2018 the business picture is mixed. 3 out of 10 (33%) expect a negative impact on their business, but 4 out of 10 (43%) expect their business to see some competitive advantage.
Explaining these findings James Stewart, Head of Brexit at KPMG UK said:
“Many people talk about Brexit as if it’s exclusively a negative force to be mitigated. But our clients often see it differently. Whilst over a third of companies expect some negative impact including job losses if a transition period isn’t agreed by April, many companies, particularly medium-sized challenger brands, see disruption as an opportunity. For them Brexit is a chance to unleash their entrepreneurial spirit, to open up new export opportunities or realise a competitive advantage on their larger competitors. The fact that some businesses, even in the same sector, will be affected in different ways often gets lost in today’s polarised Brexit debate. Some organisations need to fix the downsides of Brexit, others are looking to exploit the upsides – but the smartest are doing a combination of both.”
Looking further ahead the survey found that 3 out of 4 (76%) CEOs and CFOs are confident the UK will secure a long term Brexit deal with the EU before March 2019, whilst 16% said they were not confident.
The survey also found that:
• CEOs and CFOs across the East of England, the Midlands and Yorkshire are some of the most confident that Brexit will be good for their business. Whereas CEOs and CFOs across London, the South West and the South East are some of the least confident.
• CEOs and CFOs across transport and storage, construction and manufacturing are less likely to say they will be ready to operate as usual if there is no transition deal after the UK leaves the EU in March 2019.
|Business leaders regard the greatest Brexit challenge as:||Business leaders regard the greatest Brexit opportunities as:|
|Disruption and uncertainty||21%||New export opportunities||33%|
|Loss of trade||17%||Better economic conditions||14%|
|Access to talent||12%||Increased investment||10%|
|Note: Here we see a relatively even distribution of shorter term, more tangible issues.||Note: Here we see a relatively narrow distribution of longer term, less tangible issues.|
Notes to editors:
For the purposes of this survey medium sized businesses are defined as those with a minimum revenue of £100 million+ and large businesses are defined as those with a minimum revenue of £500 million or over.
For further information please contact:
Paul Middleton, KPMG Corporate Communications
T: +44 (0) 207 694 2180
M: +44 (0) 7387 257 543
KPMG Press Office:
T: +44 (0) 207 694 8773
About this survey:
The research was conducted by Censuswide using a combination of an online survey and CATI (Computer Assisted Telephone Interviews), with CEOs and CFOs working in companies with a turnover of £100 Million + revenue in GB between 28/02/2018 – 07/03/2018. The survey was conducted on a random sample. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.