7 March 2019

  |  CBI Press Team

News

'Brexit stalemate means growing damage today and weaker economy tomorrow'

UK businesses are warning that recent Brexit uncertainty has significantly affected their sales and investment plans over the last few months, a new CBI survey says.

'Brexit stalemate means growing damage today and weaker economy tomorrow'

UK businesses are warning that recent Brexit uncertainty has significantly affected their sales and investment plans over the last few months, a new CBI survey says.

273 firms across the services, manufacturing, and distribution sectors took part in a survey assessing how ongoing Brexit uncertainty has affected various aspects of their business and what concerns them about a potential ‘no deal’ Brexit scenario.

Less than one month before the UK is set to leave the European Union, firms believe:

  • That the recent uncertainty around Brexit has negatively affected sales (weighted balance of -58%) and UK investment (-43%)
  • That costs have increased significantly (+59%) as a result of Brexit uncertainty, and that stockpiling of goods is an everyday business reality (+43%) with ‘no deal’ still on the table
  • Nearly 9 in 10 firms are concerned about potential delays at borders arising from a ‘no deal’ scenario.
  • Tariff changes also featured strongly among firms’ fears under a ‘no deal’ scenario, with 57% of respondents saying they were ‘extremely’ concerned and 19% ‘moderately’ concerned.
  • Nearly half (47%) of respondents reported ‘extreme’ concerns about uncertainty on EU citizens’ status, with 27% moderately concerned.

See notes to Editors for results tables.

Commenting on the findings, Rain Newton-Smith, CBI Chief Economist, said:

“With Brexit stuck in stalemate, this only means growing damage today and a weaker economy tomorrow. Growth is at a near standstill and investment is evaporating; the economy is undoubtedly slowing down.

“Businesses are getting on with the day job and continue to show genuine resilience in the face of recent uncertainty.

“But the spectre of no deal is holding them back from investing in new factories, new overseas markets and new jobs.

“No deal would unleash a minefield of consequences that cannot be circumvented by mini-deals and last-minute horse-trading. Holding out for unicorns will guarantee no deal. Only backing a deal will take business uncertainty off boiling point.

“MPs must put jobs and the UK’s economic wellbeing before dogma and finally agree a way forward. Get behind the Prime Minister’s deal, but if you can’t, then get behind something else fast, to protect communities and living standards.”

Note on the data

The survey was carried out between 19 and 28 February. 273 firms responded.

A ‘balance’ is the difference in percentage points between the weighted percentage of firms answering that output is “up” and the percentage answering “down” (for example, if 30% of firms say that output is up, 60% that it is unchanged, and 10% that it is down, the balance statistic is +20%).

The data presented are weighted by company sector and employment to ensure the results are representative of the UK economy.

How do you feel the uncertainty around Brexit has affected the following aspects of your business over the last three months?

 

Weighted %

Up

Same

Down

Don’t know

Balance

Inventories/stocks

50

39

7

3

+43

Sales

3

29

62

7

-58

Exports

4

76

13

8

-9

Imports

23

59

11

7

+13

Investment in the UK

3

43

46

8

-43

Average costs

60

35

1

5

+59

Unit labour costs

30

64

3

4

+26

Financing costs

28

60

2

11

+27

Under a no deal Brexit scenario, how concerned are you about the potential implications?

 

 

Weighted %

 

Extremely concerned

Moderately concerned

Slightly concerned

Not at all concerned

NA

Delays at borders

61

22

6

5

6

Uncertainty on status for EU citizens

47

27

13

10

3

Ability to attract talent from around the world

37

25

22

12

3

Tariff changes

57

19

16

6

3

Regulatory trade barriers

42

25

26

6

1

Ability to manage cross-border data flows

26

27

33

10

5

Loss of third country trade deals

31

29

21

12

7

Exchange rate volatility

58

28

12

2

1

Impact on inflation

45

29

20

6

1