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British businesses are at their most pessimistic level since the EU referendum in 2016, with a majority admitting they fear the long-term effects of Brexit, a new survey by Deloitte has revealed.
CFO pessimism over the long‑term effects of Brexit has risen to its highest level since the EU referendum in 2016, with 81 per cent of chief financial officers now expecting Brexit to lead to a deterioration in the overall environment for business in the long term.
The accountancy group's first quarter survey revealed that CFO pessimism about the short‑term effects of Brexit also remains elevated, with the percentage of CFOs who expect to reduce hiring at its highest level in more than two years.
"CFOs rank Brexit as the top risk facing their businesses, followed by weak demand in the UK," Deloitte said.
"Rising geopolitical risks worldwide ranks as the third highest risk. Several rounds of trade talks between the US and China have raised hopes of a de‑escalation in trade tensions, easing concerns over greater US protectionism."
Expectations for revenue growth also remain depressed, the accountancy group found, with a majority of CFOs expecting a decline in UK corporates’ revenues over the next 12 months.
Given the volatile environment, defensive strategies – cost reduction and increasing cash flow – remained the top priorities for CFOs in the first quarter.
"They now have a sharper focus on increasing cash flow than at any time in the last nine years," Deloitte said.
However, despite their defensive stance, CFOs rated introducing new products/services or expanding into new markets as their third highest priority.
Additionally, more than two‑fifths of CFOs – 44 per cent – reported that their businesses have experienced a rise in recruitment difficulties or skills shortages over the last three months.
Deloitte interviewed 89 CFOs, including 48 representing FTSE 100 companies and smaller firms on the FTSE 250.