February 13, 2018
There’s no doubt that Brexit will impact on businesses in different ways depending on the country where they are based and the sector(s) they operate in.
For a better insight, we asked business figures to comment on the impact of Brexit in three critical areas – turnover, employees and clients/customers. The results show, once again, that there is a level of confidence about the relative impact of Brexit.
A remarkable 66% of all firms surveyed said they expected to increase turnover in the first 12 months following Brexit, with only 12% expecting a decrease in turnover. This was consistent across the UK, Germany and France – although Spanish businesses tended to be marginally more pessimistic, with only 62% believing that they will see a turnover increase following Brexit against a 68% average for the other three countries.
This was also consistent across key industries – for example, 73% of professional services businesses in Germany expected to see some increase in turnover, compared to 69% in the UK and France, and 66% in Spain. UK-based financial services firms expected to see the highest average increase in turnover across the four countries and the main sectors, with a mean increase registering at 60%. This optimism from one of the sectors seemingly most at threat from Brexit in the UK could be seen as unusual, but is possibly a reflection of the potential for EU financial services firms in the UK to reduce the size of their operations, providing UK firms with opportunities to claim that business.
When it comes to the number of employees in each firm there is a similar story – a majority of companies expect to increase their headcount in the 12 months following Brexit, some significantly so. 64% of all companies surveyed expected to see some increase in employees following Brexit. Indeed, around 29% of respondents said that employee numbers would double or more in that timeframe – although this was slightly less in Spain at 22%, compared with 33% in the UK and Germany, and 27% in France.
Only 10% of all businesses expected to see a decrease in employees – with the most in the UK at 13%, compared to 6% in Germany, 9% in France and 11% in Spain. Less than 2% of respondents said their number of employees would decrease by half or more.
In terms of sectors, manufacturing firms expect the smallest average increase in employees, with the mean increase across all four countries being 39%, compared to 44% in financial services and 46% in professional services. Just over a quarter of all firms expected no change in the number of employees in the year following Brexit.
Again we see a remarkably similar picture when it comes to clients and customers. 66% of all firms expect to see an increase of some sort in the 12 months following Brexit – with the mean increase being 47%. Spanish firms, once again, are more pessimistic than their counterparts, with an expected mean client growth of only 37% – compared to 46% in France, 52% in Germany and 53% in the UK.
Generally speaking, those firms that responded to our survey seem to think that Brexit will not have as big an impact as some have suggested. Only small numbers of respondents (less than 1 in 8) foresee reductions in turnover, employee numbers and clients/customers in the short term following the UK’s departure in March 2019 – and these decreases average 10-12%, although slightly higher in the UK and Spain than in Germany and France.
Most interestingly, between a fifth and a quarter of firms believe that there will be no change at all as a result of Brexit – for example, 29% of French manufacturing firms believe there will be no change to their turnover in the year following Brexit. In fact, the vast majority of firms are optimistic that turnover, employee numbers and clients/customers will increase following the UK’s departure from the EU – even in the UK. Some of this can be explained, presumably, by firms thinking they will be able to gain customers from existing UK operations. In other places, this optimism could be explained by the changes Brexit will bring about for domestic consumers – particularly in the UK. For example, 67% of UK professional services firms foresee growth in employee numbers following Brexit, at an average growth of 48%; perhaps to manage new business that will result from the decrease in EU firm activity in the UK. More cynically, it’s possible that the figures indicate a worrying degree of complacency about what might actually happen (especially in the case of no deal) and a high degree of confidence in the global economy offsetting any negative impact for growth across the region.
This research was conducted by FTI Consulting’s Strategy Consulting & Research team from4-19th December 2017, involving n=2,568 senior decision makers in large corporates across the United Kingdom, Germany, France and Spain.
The country-specific breakdown is as follows:
• United Kingdom: n=642
• Germany: n=632
• France: n=646
• Spain: n=648
Please note that the standard convention for rounding has been applied and consequently some totals do not add up to 100.
Further information on the results and methodology can be obtained by emailing firstname.lastname@example.org