Accountancy firm Deloitte has found that finance chiefs at some of the country’s leading companies have become much more confident in the British economy since it became clear that Britain had secured a Brexit transition deal last month.
The report found that 27 percent of chief financial officers interviewed after the deal was struck were more optimistic than three months earlier.
This in in stark contrast with the 18 percent of CFOs who were more optimistic prior to the deal being struck.
Deloitte interviewed 106 CFOs from large British firms and major British subsidiaries of foreign companies between March 7 and March 21. Approximately four-fifths of them responded before the transition deal was reached.
Ian Stewart, chief economist at Deloitte UK, said:
The Brexit transition deal seems to have had a positive effect on the corporate mood with a clear uptick in optimism and risk appetite between those responding to our survey before and after the news from Brussels. Business confidence has edged up and is running not far off its long-term averages. CFOs have shrugged off weakness and volatility in equity markets with perceptions of uncertainty dropping to the lowest levels since spring of 2016, before the EU referendum
Risk appetite strengthened after the deal, with 23 percent of those responding after the deal was done saying it was a good time to take on risk, up from 12 percent beforehand.
The survey also showed corporate uncertainty was at a two-year low, although almost one in three CFOs said their firms still faced high or very high levels of uncertainty.
Deloitte said for the first time in two years Brexit was not the top risk for CFOs, being replaced by weak domestic demand.However, much of that weakness in demand reflects the impact that the Brexit vote has had on spending by British households, who have faced higher inflation caused by the fall in the value of sterling.
Prime Minister Theresa May and the rest of the EU’s leaders agreed on March 19 to keep their existing trade ties unchanged for 21 months after Brexit in March 2019.
The deal pushed back the risk of disruption for companies until the end of 2020, although for the transition agreement to become effective London and Brussels must first agree on their long-term trade ties for the period after 2020.