First signs Brexit will hit jobs.
Snap business reaction survey from the Institute of Directors reveals:
• A third (32%) say hiring will continue at the same pace, but a quarter (24%) will put a freeze on recruitment, and 5% will make redundancies
• 1 in 5 (22%) are considering moving some of their operations outside of the UK; only 1% say they will bring operations back
• IoD Director General says: “we will not lose our faith in the ability of British firms to overcome these obstacles“
The IoD, which did not campaign during the referendum, received results from 1,092 members between 24– 26 June.
Simon Walker, Director General of the Institute of Directors commented on the results:
“Businesses will be busy working out how they are going to adapt and succeed after the referendum result. But we can’t sugar-coat this, many of our members are feeling anxious. A majority of business leaders think the vote for Brexit is bad for them, and as a result plans for investment and hiring are being put on hold or scaled back.”
Over a third (36%) of IoD members say the outcome of last Thursday’s vote will cause them to cut investment in their business, against 1 in 10 (9%) who say they will increase investment. Just under half (44%) say it will not change their investment plans.
The overwhelming priority now for business leaders is that steps are taken to protect the economy from the negative reaction in financial markets, with three-quarters (74%) ranking this first. Next comes securing a new trade arrangement with the EU.
Firms are willing to be patient, with half (51%) thinking getting a good deal should be prioritised over wrapping it up speedily. Cool heads will be needed because, at the moment, nearly half of IoD members worry the rest of the EU will react negatively to the UK in negotiations. There is no consensus yet among business leaders on what trading model the UK should aim to achieve.
“There is no point crying over spilled milk. We will not lose our faith in the ability of British firms to overcome these obstacles, but these results highlight the importance of the Bank of England maintaining stability in the financial system. It is crucial that the banks do not starve businesses of cash.
“Businesses have a clear message to those who may wish to replace David Cameron as Prime Minister: during the referendum campaign we were promised an open and outward-looking country after Brexit, now it must be delivered.”
Full results below:
Do you think the result of the referendum will be positive or negative for your primary organisation?
|Makes no difference||9.43%|
What impact will the referendum result have on your organisation’s overall investment plans?
|Significantly increase investment||2.56%|
|Slightly increase investment||6.41%|
|Investment levels will remain the same||44.41%|
|Slightly decrease investment||17.12%|
|Significantly decrease investment||19.23%|
Will the result cause your organisation to move any of its operations?
|We will consider moving some of our operations out of the UK, to elsewhere in the EU||16.67%|
|We will consider moving some of our operations out of the UK, to a country outside of the EU||5.22%|
|We will keep all of our present UK operations here||71.34%|
|We will consider moving some operations that are currently based elsewhere in the EU back to the UK||0.64%|
|We will consider moving some operations that are currently outside the EU back to the UK||0.64%|
How will the result affect your primary organisation’s hiring intentions?
|The pace of hiring will increase||1.74%|
|We will continue hiring at the same pace||32.05%|
|We will continue hiring, but at decreased pace||7.69%|
|We will freeze hiring new staff||23.63%|
|We will make redundancies||5.40%|
|Rank 1||Rank 2||Rank 1 or 2|
|Take steps to stabilise the economy in the face of any negative reaction in financial markets||74.45%||8.24%||82.69%|
|Securing a new trade arrangement with the European Union||9.07%||33.97%||43.04%|
|Undertake an audit of all EU-derived UK legislation to assess which rules should be kept and which should be scrapped and/or amended||2.38%||8.61%||10.99%|
|Clarifying the status of EU citizens in the UK, and UK citizens elsewhere in the EU||5.49%||18.59%||24.08%|
|Prioritise new UK trade agreements with high growth markets and ensure preferential market access to third countries (via existing EU trade deals) is maintained||8.61%||30.59%||39.19%|
How do you believe the other European member state governments are going to react to the UK voting to leave the EU?
|Positively: the remaining EU states will maintain close trading links with the UK and seek maximize beneficial arrangements between one another||11.81%|
|A mixture of positively and negatively: agreement on some issues of mutual benefit, but in others the UK will be left at a disadvantage||44.32%|
|Negatively: the remaining EU states will seek an arrangement designed to have an adverse impact on the UK to prevent other Member States from following suit||42.58%|
Speed or getting best deal?
|1 Speed priority over getting the best deal||6.23%|
|3 Equal priority||32.14%|
|5 Getting the best deal priority over speed||32.51%|
Thinking with your primary organisation in mind, given the electorate’s decision to vote to leave, what do you think the most optimal arrangement would be in place of full EU membership?
|Joining the European Economic Area (like Norway and Iceland – would preserve existing Single Market access level but no ability to negotiate or vote on EU legislation. UK would still be bound by EU social/employment regulation and free movement of people, but could negotiate its own trade deals)||27.83%|
|Bilateral free trade agreement only (such as the EU’s recent deal with Canada)||40.03%|
|Rely on agreements under UK membership of the World Trade Organisation (no specific UK-EU agreement)||8.51%|
|Join Customs Union (like Turkey – allows free movement of goods with no customs duties, but with a common external tariff. EU free trade agreements apply, but only one way – i.e. opening up UK markets to third party countries, but not vice versa)||4.96%|
|Other - please specify||4.07%|