FINANCE chiefs have warned that Brexit uncertainty is impacting business decisions and conditions will deteriorate further once the UK leaves the EU.
A quarterly survey from accountancy giant Deloitte has shown about 88 per cent of chief financial officers (CFOs) see business uncertainty as above normal to very high, while 65 per cent expect the long-term business environment to be worse after Britain leaves.
That is a slight improvement from the 92 per cent who said uncertainty was above normal in the second quarter, but is the second highest reading since the end of 2012.
“Despite some improvement since the sharp, post-referendum deterioration, risk appetite and optimism remain close to previous lows and perceptions of uncertainty are elevated,” Deloitte said.
CFOs rated Brexit as the biggest business concern, followed by weak demand in the UK and concerns about poor productivity.
The news comes as figures from professional services firm KPMG have shown an increase in the number of Scottish businesses failing since the Brexit vote.
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Statistics for the three months to September 30 reveal the total number of corporate insolvency appointments increased by 30 per cent (230, up from 177) compared to the same three months in 2015. Administration appointments, which usually involve larger businesses, increased by 42 per cent (27, up from 19) and there was a 28 per cent increase in liquidation appointments (203, up from 158), which tend to affect smaller businesses, over the same period.
April to June 2016 had seen a 14 per cent decrease in the number of insolvency appointments (230, down from 269). Liquidations decreased by 17 per cent (203, down from 245), while administrations saw a small rise of 13 per cent (27, up from 24).
Blair Nimmo, head of restructuring for KPMG in the UK, said: “While it would be easy to blame an immediate post-Brexit rise in insolvencies directly on the result of the vote in June, in reality the statistics are more reflective of the long-term impact uncertainty has had on the economy in the past 12 months or so.
“Even now, we remain in uncharted waters, and uncertainty will continue to influence and shape the business landscape. Nevertheless, overall confidence in the economy is high, and as our recent CEO survey findings reveal, business leaders are largely positive about the country’s future and of their businesses.
“Companies must ensure they plan appropriately so they can adapt to any changes in market conditions, particularly those who trade with the EU. We’re working with businesses across sectors to help with contingency planning and to ensure they adopt a nimble approach to the impending transition.
“Effective cash management, operational efficiencies and cost reductions continue to play an important role in achieving this approach.”
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