The future of corporate Britain is seemingly in flux. Even though two-fifths of SMEs are positive about the upcoming months, not everybody shares that optimism. The British Chambers of Commerce (BCC), the business network, has come out to say that UK’s current GDP growth rate won’t last, while a new survey published by the Financial Times and the ICSA, the governance institute, paints an equally gloomy picture.
Speaking on the Today Show on BBC Radio 4, Adam Marshall, director general of the BCC, said that the approach of “business as usual” adopted by many firms after the June 23 vote to leave the EU may have fostered economic growth this year but warned that there will be “a bumpy road ahead in 2017 for British businesses and the economy”.
The business body estimated that GDP will grow by 2.1% in 2015 and then slump to 1.1% in 2017 and to 1.4% in 2018. And while the forecast for next year is a slight upgrade from the previous estimation of 1%, it’s still the weakest annual rate of growth for the UK since the 2008 financial crisis.
The BCC put the anticipated slowdown in growth down to fall in the value of the sterling and a higher inflation rate. On a slightly more positive note, the BCC didn’t predict that the UK will be hit by either a recession or a big spike in unemployment and didn’t rule out the chance that the forecast could change as businesses adapt. “A lot of them are out there saying that disruption and change creates opportunity and they’re looking for new market niches,” said Marshall.
About the same time as the BCC director general made his statement on the Today Show, the Financial Times and the ICSA released their biannual Boardroom Bellwether report. Having surveyed the FTSE 350, the results seemingly backed up Marshall’s prognosis, revealing that 72% of respondents expect economic conditions to deteriorate in 2017. That’s the lowest vote of confidence recorded since the survey began in 2012 and major leap from just 11% in December 2015. Only 8% of respondents anticipate an improvement in the next 12 months, down from 40% in December 2015.
But while 59% of the companies believe Brexit could be potentially damaging to their business, only 43% view the UK leaving the EU as the main risk to their firm and just 1% are considering moving their head office from the UK to somewhere in the EU.
Peter Swabey, policy and research director at ICSA, also noted that the while 13% of the FTSE 250 were positive about Brexit, only 3% of the FTSE 100 shared that sentiment. “This makes sense as the FTSE 100 is more geared towards international trade where Brexit will likely have a greater impact, but it remains to be seen how sentiment will change across the board the closer we get to triggering Article 50,” said Swabey.
Given that both the Boardroom Bellwether report and the BCC believe that 2017 will be a tumultuous year for business, entrepreneurs better have their wits about them come the new year.