Uncertainty within the spheres of the economy and politics, alongside temperamental currency behaviour, are both suggesting that the prospect of a Brexit is causing serious harm to business confidence. All whilst Financial Executives in the UK continue to demonstrate the greatest expertise in Europe on recent developments such as Block Chains and Smart Contracts.
Shaken Confidence: the prospect of Brexit
The most recent Global Business Outreach Survey has revealed that two thirds of the United Kingdom’s Chief Financial Officers have less optimism about the British economy now than they did at the close of 2015.
Out of all Financial Executives, 70% cited uncertainty in the economy as their primary concern. The prevalence of worries about uncertainty were followed by concerns about risks to currency at 47%, and uncertainty in the nation’s politics at 35%. The conclusions following from these findings suggest that the mere possibility of Brexit, and its continued dominance of public discourse, could be having a damaging effect on experts’ confidence in the UK’s economy.
The Survey’s Provenance: 20 years of expertise
Orchestrated and collated by Duke University’s CFO Magazine, aided by the help of the Fuqua School of Business in collaboration with the Grenoble Ecole de Management and Tilburg University, the survey has been run for over twenty years, active every quarter, concluding most recently this year on March 5.
The Findings in Depth: less optimism, with some silver linings
The survey’s results indicate that many of the nation’s CFOs conclude a 25% chance of recession in the country’s economy by the end of the year. Though rather concerning chances, these numbers still place the UK in a more positive position than the like of Brazil, South Africa, and Greece with their own predictions in mind.
Of CFOs concerned about the prospect of the year ending in economic recession, 72% see a slowdown in our economic and political relations with Europe as the greatest contributing risk factor. At a lower but still considerable 44%, citations of political uncertainty and deficits cause by budgets are a major part of CFOs’ recession worries. Concerns about slowdown in our relations with emerging economies in the east, principally China, worry an additional third of those surveyed.
Philippe Dupuy, Professor of Finance from the Grenoble Ecole de Management, stated that the issues ‘keeping CFOs awake at night’ boil down to the ongoing Brexit debate, which is motivating CFOs’ leading concerns about ‘political uncertainty, currency risk, and slow-down in Europe.’
One silver lining concluded by the survey is the unique innovative potential amongst the UK’s CFOs, who have the highest knowledge in Europe of recent developments such as blockchain and smart contract. Over half of UK CFOs claim to understand both of these technologies, with this number under a third on average in the rest of Europe.