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 continued: “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.