CEOs panic over September Brexit bump
When the governor of the Bank of England starts calling in CEOs to understand their view on what's going on, and tries to reassure them, that's when we should start to panic!
I last posted on the day after the Brexit vote, when UK CEOs were in a state of shock over what had taken place: what did it mean for them and their businesses, and how would Europe be affected overall?
You can read here.
Now, things have settled down slightly; CEOs are focused on their specific companies and the collapse in confidence that we’re seeing in the UK.
Business confidence for example is down by -57% in the Confederation of British Industry trends, and to give you some context, that’s the lowest recorded since the financial crisis more than seven years ago.
“Two-thirds of (corporate) respondents suggested they will postpone or reduce spending in the UK in the next six months. The referendum result overtook weakness in Chinese and Asian economies as the most concerning issue for companies”.
FT.com, July 13, 2016.
Consumer confidence is falling even further than business confidence, being at its lowest since the 1990s, when Britain was in the middle of a recession and a housing crash.
“Now is the time for companies to understand and respond to consumer concerns by anticipating and meeting the (consumer’s) needs”.
Joe Staton, GFK's Head of Market Dynamics
The top CEOs know that when those confidence indicators dip, it’s possible that we’ll go into a financial recession or downturn. The general view, is that that’s where we’re headed for next. Figures from the closely-watched Markit Purchasing Managers’ Index (PMI) showed that the economy had taken its steepest downturn since the peak of the financial crisis in 2009.
We’re also heading into August which further complicates factors. Many CEOs are taking annual leave and are therefore putting off purchasing decisions.
My view, is that we’re soon to see a significant Brexit “bump” in September and October. It will be a vital time to see how the government and policy makers respond. Our CEOs are now in a place of extreme uncertainty, not just in the short term, but also in the long term. They’ll be asking, what will Britain do next, how will Britain exit over the next two years?
I think that companies need to look at the stats and be ready for this downturn, in terms of available capital and making conscious decisions about investment. If CEOs make big, bold bets, there could be upsides to the downturn and uncertainty. Opportunities come when companies are forced to innovate and disrupt the market to avoid the consequences of a financial recession.
The Brexit bump is on its way, and we’re yet to see how companies actively respond. Wait for my next Brexit post at the end of September where we’ll review.
If you're a CEO, you're concerned about the affect of Brexit on your business and would like to discuss, contact Sarah McDonnell: [email protected]
Like if you can see a September Brexit bump coming.
Comment: What’s your take on the impact of Brexit on your company? / how your CEO is handling it?
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By Steve Tappin
Chief Executive, Xinfu, Host BBC CEO Guru
Steve is a personal confidant to many of the world’s top CEOs. He is the host of the award winning BBC ‘CEO Guru’, which features in-depth, on-the-record interviews with the CEOs of the biggest and fastest-growing companies. Steve is the author of ‘The Secrets Of CEOs’, which interviews 200 CEOs on business life and leadership.
Sources:
https://uk.businessinsider.com/brexit-aftermath-gfk-consumer-confidence-survey-2016-7
https://www.ft.com/fastft/2016/07/13/collapse-in-business-confidence-after-brexit-credit-suisse/
https://news.sky.com/story/uk-facing-recession-threat-after-brexit-vote-10509151
Managing Director at Pastimes Ltd
8 年I agree with Stuart, its a well known fact that if you spread doom and gloom, you eventually create it, bellyaching about a result that does not fit your views, does not make it wrong. What it has shown in the last month is our so called partners and friends in Europe are clambering like vultures to steal our businesses for themselves and we haven,t even officially left yet, clearly showing the EU is not a solid union working as one. Business is like a garden, constantly changing, somethings grow, some die, business leaders main responsibilities is to drive it through these changes, whether they are tax laws, Stupid Brussels Regulations or a result of day to day development, that also includes raising business profiles to attract more business, not whinging because things have changed (and will continue to change), when one door closes another will open! so why pay Billions to stay in a club and create huge trade deficits with our so called partners.
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8 年Que con potan de ana lan a
Owner, Teachins; Investment Performance, Attribution and Risk Specialists
8 年Chaps ... so; here we are 'all dressed up and nowhere to go' ..