Some analysts questioned whether Brexit was to blame for the latest round of SME insolvencies in the U.K., but the latest reports suggest finance chiefs of larger companies are scoffing at the idea that Brexit may negatively impact operations.
Reports this week said the largest businesses in the country have revealed new levels of optimism that are at an 18-month high following a survey by Deloitte.
“Buoyed by a backdrop of continued U.K. growth, CFOs have become markedly more positive on the outlook for their businesses and enter 2017 in better spirits than at any time in the past 18 months,” said Deloitte Chief Economist Ian Stewart.
The findings contradict earlier predictions from analysts that Brexit may cause pessimism among top U.K. conglomerates. Researchers found, though, that output was boosted by 0.6 percent in the third quarter, driven by consumer spending.
According to the report, 27 percent of top executives said they were more optimistic about the future of their companies in the year’s fourth quarter than they were just three months ago. Still, more than a fifth said they were less optimistic, and researchers fond that two-thirds of businesses still believe that Brexit will have a negative impact on their companies in the longer term.
Levels of uncertainty remain high, and CFOs are prioritizing “defensive strategies,” reports said. Nearly 90 percent of companies’ CFOs surveyed said the uncertainty regarding financial and economic matters is abnormally high; nearly half said they will be prioritizing reducing costs for the next year. Increasing cash flow, considered a defensive strategy, too, is also at the top of their priority lists, researchers said.
“Risk appetite remains depressed and is well below average levels and corporates remain on a defensive footing,” Stewart continued. “Cost reduction and building up cash [are corporates’] top priorities.”