Brexit? What Brexit? Business confidence remains strong in the UK

Study finds

Business confidence remains robust in the UK, according to Herbert Smith Freehills’s latest corporate debt survey.

Across all areas of investment at least 80 per cent of respondents projected the same or higher levels of investment than in 2017.

Noting that this research was undertaken prior to the breakthrough on the potential transition arrangements, respondents overwhelmingly reported that Brexit was not affecting their spending plans.

Bank lending remains the cornerstone for corporate debt raising with increasing focus by corporates on their bank relationships.

Corporates are likely to maintain or increase cash reserves in 2018.

Compared to 2017, respondents were marginally more pessimistic about the downside risks of Brexit although this is projected to reduce over time. There was significantly greater concern about the negative business impact of a ‘hard’ Brexit.

The end state is too uncertain for corporates to meaningfully finalise/implement Brexit contingency plans. That said. Brexit is not affecting the availability of treasury products or the terms on which they areavailable.

This research comprises a survey of, and follow-up interviews with, FD and treasury professionals of 60 large UK corporates (primarily FTSE 100, FTSE 250 and equivalents) conducted in February and March 2018.

Commenting on the survey, Kristen Roberts, partner at Herbert Smith Freehills said: “Business confidence and investment remains robust and corporates are taking the uncertainty caused by Brexit in their stride; Brexit will however play an increasing role in determining the timing of debt raisings planned over the short to medium term. Overall, and while the cost of doing so may be increasing, it is expected that corporates will continue to have available to them the array of products and markets in order to raise debt.”