Deloitte’s latest survey of chief financial officers found that companies are scaling back spending and hiring plans more ferociously than at any time for nine years amid Brexit uncertainty.
Stephen Welton, founder and CEO of BGF, commented:
The Deloitte survey provides a useful snapshot of UK trading conditions. But while the results are interesting, a comprehensive assessment of the UK business environment requires a wider lens.
The survey reflects the views of Britain’s biggest companies – but overlooks the views of the growth business community. The engines of the economy are not the FTSE 250 – but the millions of other firms that make up the majority of enterprise in this country. While the view from big business is important, there is a real danger that we treat the results as indicative of overall sentiment.
There are, of course, reasons to be cautious. But the hidden danger is not Brexit – that is in plain sight – it is that we ignore the views, and the needs, of the millions of businesses that truly power the UK economy. The survey says that lowering costs, scaling back spending and hiring and boosting cash flow are the top priorities for finance chiefs. Not in our experience. We speak to hundreds of entrepreneurs every week and their top priority is growing – not cost-cutting. Their biggest issue on hiring is finding the right people.
Small businesses are used to uncertainty. They are used to facing conditions where nothing is a given. And that is the other side of the equation that we need to focus on. Otherwise, we will find that negative sentiment results in a self-fulfilling prophecy. If all business leaders cut costs, hire fewer people and decrease investment, they will undoubtedly put the brakes on their own growth – and that of the UK economy. A recession will likely follow. So, it is imperative that we do not impair the UK’s prospects with gloomy forecasts that focus only on macroeconomic factors.
There are opportunities for all companies in all sectors – even in difficult markets. It is up to banks and investors to take the initiative. Businesses will not be able to benefit from the opportunities on the horizon unless the fundamentals are in place. So rather than focusing on big cuts to big business, we need to ask ourselves what we can do for ambitious businesses to help them grow. They say a rising tide lifts all boats. Well, now the tide is going out – and if we don’t go for growth, we will all be left sitting on the shore.