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BREXIT SURVEY

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IN ASSOCIATION WITH

WHAT NEXT AFTER BREXIT?

What are your plans for capital expenditure over the next three years?

Do you export or plan to export?

23.1%0.0%

36.5%55.8%5.8%3.8%

53.8%7.7%5.8%3.8%

Acquire key targets

Flotation

Grow by export

Grow by new products and services

Hand over to family

Offshore production

Organic growth

Outsourcing

Sale to corporate

Sale to management team

Continuing free tradewith European markets

Securing trade agreements withcountries outside the EU

Taking control of ourown regulations

Securing rights for EU nationalsin the UK and vice versa

Maintaining a ‘level playing field’ in terms of regulation

Accessing the best talent globally

External theft of customer data

External theft of IP / company confidential information

Nuisance malware & viruses

External attacks on reputation

Insider data theft

Other

of companiesexpect their business costs to rise in the next financial year?

What is the most important factor to you when considering a funding facility?

What is your biggest energy headache?

Have your business costs led to any of the below cashflow challenges?

What area will you prioritise for cost savings next year?

What is the main cost to your business?

What is the main area you plan to invest in in the next financial year?

81.8%say that PAYBACK PERIOD is the most important consideration when assessing a capital investment into a long-term cost-saving solution? 40.7%

72.7%

35.5%35.5%16.1%48.4%22.6%77.4%

63.6%18.2%54.5%9.1%STAFF

7.3%SALES

14.3% 12.2% 22.4% 12.2% 18.4%

15% 45% 12.5% 5% 22.5%

20.4%STAFF SALES MATERIALS EQUIPMENT PROPERTY ENERGY

UTILITIES

10.9%MATERIALS

1.8%EQUIPMENT

Unable to pay creditors

Unable to purchase new equipment

Unable to purchase new stock

Unable to undertake new projects

Unable to negotiate prompt payment discounts from suppliers

Unable to grow and expand the business

Energy-saving systems/softwareWater harvestingSolar generation

Biomass generation

1.8%ENERGY/ UTILITIES

5.5%PROPERTY

Supp

lier i

ssue

s

Risi

ng c

osts

Com

plex

ity

Budg

et p

lann

ing

Redu

cing

con

sum

ptio

n

What initiatives do you undertake?

36.1%

30.6%5.6%

11.1%

11.1%5.6%

STAFF

INTEREST RATES

FLEXIBILITY

REQUIRED SECURITY

SALES

MATERIALS

EQUIPMENT

ENERGY EFFICIENCY/RENEWABLE TECH.PROPERTY

65.7%

45.5%39.4%15.2%

plan to raise the finance to invest in the next year by using the company’sown capital

25.4% 65.9% 29.3% 19.5% 41.5% 31.7%INCREASE CONSIDERABLY

34.4%1-5 YEARS

66.7% 30% 3.3%MORE CONFIDENT

0-10% 11-20% 21-30% 31-40% 41-50% 51-60% 61-70% 71-80% 81-90% 91-100%

LESS CONFIDENTTHE SAME

18.8%6-10 YEARS

15.6%11-15 YEARS

31.3%

25.4%REMAIN THE SAME

9.9%DECREASE SOMEWHAT

2.8%DECREASE

CONSIDERABLY

36.6%INCREASE SOMEWHAT

What are your plans for capital expenditure over the next three years?

What factors are important to the success of a new product?

0-10 per cent increase

10-25 per cent increase

25-50 per cent increase

50-75 per cent increase

75-100 per cent increase

Do you plan to recruit more staff, apprentices or trainees over the next three years?

How important is innovation to your business?

What is the greatest opportunity for your business in the next 12 months?

What would you like to see in food and drink training courses?

When employing young people, do they have the right skills when leaving college?

When employing new staff, what is the main difficulty your company faces?

What would you like to approve with training?

What barriers do you face?

What are the barriers to innovation?

Do you intend to use innovation as a way of breaking into or developing overseas markets? If so, how?

How do you protect your innovations?

72.2%24.1%1.9%0.0%1.9%

Where have you sought legal advice in the last 12 months? Em

ploy

men

t

Cont

ract

ual d

ispu

tes

Inte

llect

ual p

rope

rty

Prop

erty

-rel

ated

tran

sact

ions

Heal

th a

nd s

afet

y

Do you plan to increase domestic sales over the next three years, if so mainly how?

of companies will spend less than 10 per cent of their turnover on research and development and innovation over the next three years

expect their business to be more profitable in 2015

64.7%

65%3%

will spend between10 and 25 per cent of their turnover on research and development and innovation in the same period

*Types of breach include: ransomware, Trojan horse, phishing, bogus emails, spoofing attacks

31.4%

of companies*

are either planning toor are already repatriating parts of their supply chain*applicable companies

66.7%

11.7%

YES, ALREADY UNDERWAY

21.6%NO, BUT WILL DO

11.8%NO PLANS

NoBy increasing sales to existing customersBy finding new customers in existing marketsBy offering new products and/or servicesBy breaking into new domestic markets

Cost/access to finance

Skills

Lack of demand for innovative products

Time

Lack of support from outside organisations

Risk avoidance

NoExports

LicensingOverseas production

Joint venture

47%30%19%14%16%

NOT AWARE

AWAREAND

CLAIMING

AWAREAND NOTCLAIMING

5.9%62.7%72.5%49.0%35.3%

AFRICA ANDMIDDLE EAST

5.4%

EASTERNEUROPE (NON-EU)

5.4%

INDIAN SUBCONTINENT

5.4%FAR EAST

10.8%

SOUTH AMERICA10.8%

EUROPEANUNION

32.4%NORTH AMERICA27%

AUSTRALASIA2.7%

Are you looking to grow exports over the coming three years? If so, in whichregions?

Are you planning to invest in any product development or commercial research over the next three years?

31.2%NO

CONSIDERINGEXPORT

54.5%YES

14.3%

How long have you been exporting for?

What is the biggest challenge you face in growing exports?

Which market entry strategies are you adopting?

How important are skills to your business?

Western Europe

Germany

Mexico

Africa/South Africa

Benelux

France

Southern Europe

Eastern Europe

Indonesia

South Korea

DIRECT FROM THE UK

LOCAL DISTRIBUTORS

LOCAL AGENTS

LOCAL JOINT VENTURE

ACQUISITION OF LOCAL COMPANY

29.0%25.8%22.6%22.6%19.4%19.4%19.4%16.1%12.9%12.9%

Do you feel more or less confident about exporting than last year?

What percentage of your revenue is generated through overseas sales?

86.7%

43.3%

30%

26.7%

36.6%40.2%24.4%56.1%

13.4%

28.0%

MORE THAN 21 YEARS

Do you expect to apply for public sector funding or grants in 2015?

Do you expect to invest in staff training and development in 2015?

have encountered skills shortages in 2014 that have affected business growth

How do you expect turnover to change in 2015? Will you seek finance for

investment and growth?

Do you expect to employ more people in 2015?

1%POOR 12%

15% 75%10%

EXCELLENT

56%GOOD

82%13%

61% 17% 21%57%33%

33%43%

5%

YES NO UNSURE

YES 59% NO 25% POSSIBLY 16%

31%ACCEPTABLE

31%INCREASE OVER 10%

INCREASE OVER 10%

27%INCREASE 5-10%

22%INCREASE 0-5%

15%NO CHANGE

5%DECREASEBY 0-10%

64%

39%

YES NOUNSURE

YES24%

NO64%

UNSURE12%

Do you expect to seek external business advice or support during 2015?

If you don’t currently trade internationally, would you consider it in the next year?

Do you currently trade internationally?

YES 42% N0 48%UNSURE 10%

19% YES63% NO18% MAYBE

38% YES62% NO

What percentage of your turnover is spent on research and development?

If you are undertaking R&D, are you aware of and do you claim for tax incentives such as the R&D tax credit and enhanced capital allowances on R&D assets?

think this figure will increase over the next three years

routinely monitor external developments and trends among customers and competitors

8%

24% 26%

16%

7%

19%

Nothing

Less

than

1%1-

5 %6-

10%

11-2

0%20

%+

57% 36% 28% 36%

TRADEMARK REGISTRATION

DESIGN REGISTRATION

PATENTS

COPYRIGHT

KEEP THEM SECRET

WE DON’T

33%

21%

26%

36%

31%

42%

85% 50%have received support from government agencyfor their work on innovation?

Do you receive support with your innovations, ie. professional or academic expertise?84% 45%35%19%

are not aware that there is likely to be changes to the Patent Box rules from 2016, which may make early election into the regime advantageous?

YES, I RECEIVE SUPPORT

NO, I DO NOT REQUIRE SUPPORT

NO, I DON'T KNOW WHERE TO FIND SUPPORT

33%

21%14%

46%

28%

Developing new products to supply existing clients or break into new markets

14%Moving to or looking

for new premisesto enable expansion

30%Widening the geographical reach of our products /exports

24%Meeting the needs of our customers in terms of production

Premises/machinery are unable to cope with increased customer demands

Getting staff with the right competency and skills to meet company demands

More time spent on work experience in industry

Yes, they have all the skills that we require

36%No, we have to complete their education

61%They have the basic skills we need but require further training

35%The gaining of industry specific qualifications eg. HACCP, food hygiene

47% 17%have productpackaging protectedwith registered copyright

are not worried about copycats

Attracting young people into the industry

Finding the right level of further training to make new staff most effective

Distribution issuesto supply toadditional markets

Getting the right levelsof staff to meet theopportunities

Distinguishing ourselves in a saturated market

Staff development

Staff retention

Company productivity

Company development

Do you export or have plans to do so in the next 12 months?

South West only

Most of England

Wales, Scotland and/or Northern Ireland / Eire

Mainland Europe

US / Americas

Asia

Australasia

Other countries / regions not listed above

28%52%45%21%21%10%7%3%

Company reputation

Branding

Distinctive packaging

Price

Innovation

Quality 50%say industry needs to work more closely with education when designing vocational courses to attract young people

72%CRITICAL

2%USEFUL BUT

NOT ESSENTIAL

1%NOT VERY

IMPORTANT

25%IMPORTANT

Do you feel you currently have the right skills to enable you to implement your future plans?

are aware of the Employer Levy 2017 say they need

more information

49%YES

51%

50% 19%

NO

Is your business planning to do any of the following?

What type of training has been done in the past year?

plan for the replacement of specialist expertise

add additional capacity

innovate and develop products/services

increase productivity

gain (or retain) a competitive edge

grow talent

upskill existing staff

address staff recruitment and retention

undertake a detailed skills audit

Not applicableManagement/leadership

Finance, payroll and/or HRCustomer service

Sales and marketingSpecialist training

Accredited courses

33%64%58%65%49%76%72%38%8%

How much of your turnover is spent on staff development and upskilling?

Is your business looking to provide goods/services to Hinkley?

NOTHING3%

MORE THAN 20%1%

LESS THAN 1%20%

1-5%55%

6-10%15%

11-20%6%

24%YES

54%NO 23%

NOT SUREAT THIS STAGE

Are you more concerned about cyber security now than you were 12 months ago?

Is cyber security on the board agenda for your business?

Of those attacked, what was the extent of the impact, financial or otherwise?

Which security threats are most relevant to your organisation?

Which information security areas are the highest priority for your organisation?

Have you suffered a cyber-security breach in the past 12 months, including phishing or social engineering?

76% 70%YES

20%NO86% 7%

51.1%36.2%68.1%25.5%19.1%4.3%

Business continuity / disaster recovery

Company data loss prevention

Customer data loss prevention

Information security processes

Insider theft risks

IT security operations (antivirus, patching etc)

Security testing (eg penetration tests)

Staff mobile access to IT networks

Staff security awareness and training

31.9%19.1%36.2%17.0%6.4%44.7%4.3%10.6%25.5%

7%2%

YES

LESS CONCERNED

22%FEEL THE SAME

42%NO35%

DON’T KNOW

23%*YES

LOW MED

IUM

MAJ

OR

2%-5%23%

35%41%35%15%3%44%53%

Gain entry to new overseas markets

Gain entry to new domestic markets

Reduce costs and improve efficiency

Demand from a key customer

Catch up with key competitors

Maintain market position

Become dominant player in a market

What is your current spend

on R&D and innovation, as a percentage

of turnover?

In what areas of innovation are you primarily investing?

How long will it take to get a return on investment on current R&D spend?

What are the main reasons you carry out R&D?

39%19%26%26%16%7%

Are you working with a third party on R&D/innovation?

2%-5%

19%

23%

19%5%-10%

MORE THAN 10%

21%ZERO

18%0-2%

NEW SERVICES

37% NEW PRODUCTS(NON-FINANCIAL)

EFFICIENCY AND PRODUCTIVITY

12%OTHER12%

24%SOFTWARE

15%

21%LESS THAN A YEAR

47%ONE TO TWO YEARS

35%TWO TOFIVE YEARS

3%MORE THANFIVE YEARS

No

Key client

Key supplier

Another business or individual (non-supplier)

Academic institution (university/college)

Research institution

45%17%21%17%55%17%

What are the main barriers to getting R&D into commercial production?

Ensuring an appropriate return on investment

Market resistance

Securing intellectual property protection

Regulation

Securing funding

Other

100%76%69%54%46%46%39%31%23%23%15%8%

InvoicingSales pipeline

Contact databaseDocument creation

Tasks and to do listsSocial media integration

Internal communications channelProject management tools

Content library and intranetBulk email

Events managementOther (please specify)

How many employees do your company have?

How confident are you in your future business success following the UK’s vote to leave the European Union?

Which of these do you think could benefit your company following the exit vote?

Has your growth forecast increased or decreased since the referendum?

Say that EU withdrawal will pose a very significant challenge to their businessWhat sort of information

is important to your company?

Which of these are crucial to the running of your business?

What are the biggest issues you face with your current system(s)?

Amou

nt o

f tim

esp

ent o

n pr

ojec

ts

Cont

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nfor

mat

ion

for

keyp

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orga

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tions

Cust

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que

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and

com

plai

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Cust

omer

satis

fact

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leve

ls

Deta

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erac

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with

cus

tom

ers

Empl

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eets

Invo

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stat

uses

Prog

ress

upd

ates

on

proj

ects

and

task

s

Sale

s le

ads

and

pipe

line

Staf

fex

pens

es

Staf

f hol

iday

entit

lem

ent a

nd u

sage

None

Lack

of i

nteg

ratio

nac

ross

sof

twar

e sy

stem

s

Havin

g cu

stom

er in

form

atio

nsp

lit a

cros

s m

ultip

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yste

ms

Inab

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to ta

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are

to y

our o

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n

Poor

repo

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and

anal

ytic

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s

Poor

com

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betw

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team

s us

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diffe

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Staf

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betw

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Othe

r (pl

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spe

cify

)

VERYIMPORTANT

27%Concerns about time to train staff

14%Staff are resistant to change

18%IT is not a priority

36%The long term benefits don’t outweigh the short term effort of changing

18%Tied into contracts with other systems

IMPORTANT

NOTIMPORTANT

NO OPINION

42%0-5

17%

8%

5-10

17%10-50

%%17%

1,000+

100-250

What software does your company use?

11%MORE CONFIDENT

62%

20.5%

LESS CONFIDENT

23%NEITHER MORE NOR

LESS CONFIDENT

4%DON’T KNOW

5%INCREASED43%

NO GROWTH/FORECAST HAS

REMAINED THE SAME

52%DECREASED 11%

3%36%14%47%12%

Exporting to EU countries

Importing from EU countries

Less Brussels red tape

Control over workers' rights

My business will not benefit

Don’t know

“Greatest direct impact will be the impact on wider economy” “We work with global businesses, who may cut back on the services we offer if the economy declines” “Massive administrative work due to change” “There will be a significant reduction in the level of inward property investment to the UK” “Clients using our services from abroad will decrease, as will funding”

“ Uncertainty causing economic recession or at least slowdown”

“ External foreign investment will be affected in the short term, hopefully not in the long term” “Collapse in client confidence. Orders will drop” “ Lack of trust and resentment from EU businesses” “ Uncertain renegotiation of our laws and regulations” “Removal of EU procurement legislation” “People wanting to wait before they make decisions about their energy contracts will temporarily slow sales”

Which of these do you think could be a barrier for your company following the exit vote?

Key concerns

Key concernsHow will Brexit affect your investment decisions?

7%INCREASE

INVESTMENT

43%DECREASE

INVESTMENT

12%DON’T KNOW

38%REMAIN THE SAME

In which areas do you plan to increase

investment?

20%4%18%47%31%26%26%33%

EXPORTING

IMPORTING

ACQUISITIONS

STAFF

R&D

PROPERTY

NEW EQUIPMENT

IT/TECHNOLOGY

In which areas do you plan to decrease

investment?

9%10%35%80%20%38%45%29%

EXPORTING

IMPORTING

ACQUISITIONS

STAFF

R&D

PROPERTY

NEW EQUIPMENT

IT/TECHNOLOGY

38%

25%

20%

14%

32%

25%

11%

Hiring staff from EU countries

Exporting to EU countries

Importing from EU countries

Increased regulation

Accessing funding

There will be no new barriers

Don’t know

What should be the priority for the British government when negotiating the UK’s withdrawal from the EU?

Has the decision to leave the EU impacted your revenue?

When developing our strategy to leave the EU, which one of the following issues is most important for your business?

In leaving the EU, what do you see as the greatest opportunity for your business?

Has the decision to leave the EU impacted your business strategy?

Overall, do you believe your business/organisation will be better or worse off once the UK has left the EU?

62%7%Restricting

free movement

2%Other

Maintaining access to the single market

29%Regaining power for the

UK’s parliament and courts to determine its own legislation

Do you feel your business/organisation would be made better or worse off by the restriction of free movement?

5% A LOT BETTER OFF

A LOT BETTER OFF

MOST IMPORTANT

SECOND-MOST IMPORTANT

THIRD-MOST IMPORTANT

7% SLIGHLTY BETTER OFF

SLIGHLTY BETTER OFF

37%NO DIFFERENCE

NOCHANGE

36%SLIGHTLYWORSE OFF

SLIGHTLYWORSE OFF

15%A LOT WORSE OFF

A LOT WORSE OFF

Do you feel your business/organisation would be better or worse off with limited or no access to the single market?

Has the decision to leave the EU prompted you to review your business strategy?

1% A LOT BETTER OFF

5%SLIGHLTY BETTER OFF

28%NO DIFFERENCE

33%SLIGHTLYWORSE OFF

33%A LOT WORSE OFF

26% 34%40%YES NO NOT YET

9%14%

19%

38%

20%

EU funding

A recession

Labour markets

International trade

Interest rates

Consumer spending

Property values

Bank lending

Exchange rates

Which of the following are you most concerned about since the UK’s vote to leave the EU?

Which would be your preferred Brexit strategy based on the existing models below?

NORWAYMODEL

29%SWISSMODEL

6%CANADAMODEL

13%WTO MODEL31%

NEW BRITISHMODEL

21%

11%REVENUE HAS INCREASED

Has the decision to leave the EU impacted your investment decisions?

Has the decision to leave the EU impacted your employment decisions?

29%

39%YES

32%NOT YET

24%NO

38%NOT YET

22%YES

32%NO

8%IT WON’T HAVE AN IMPACT

33%

12%

12%

11%

8%6%

Removing ourselves from European regulations

18%New UK-tailored

bilateral trade deals

13%Reduced value of Sterling

boosting exports and encouraging tourists

If Britain is to successfully strike a series of new bilateral trade deals outside of the EU, which one of these economies should the government prioritise?

30%UNITED STATES

29%THE BRICS ECONOMIES

(Brazil, Russia, India, China, South Africa)

28%THE COMMONWEALTH (ie. Canada, Australia,

New Zealand)

36%NOT YET

31%NO

29%

4%IT WON’T HAVE AN IMPACT

YES

39%YES

32%NOT YET

24%NO

5%IT WON’T HAVE AN IMPACT

49%NO

9%DON’T KNOW

30%REVENUE HAS DECREASED

The Prime Minister has triggered Arti-cle 50 marking the start of two years of talks to negotiate Britain’s exit from the European Union.

In a six-page letter to European Com-mission president Donald Tusk, Theresa May said she hoped for a “deep and special partnership” between the EU and Britain once the divorce is finalised.

And so with the UK set to quit the EU by 29 March 2019 at the latest, Insider has teamed up with law firm Cripps to gauge the sentiment of businesses in the South East and discover how the Brexit vote has affected decision-making.

Uncertainty caused by the Brexit vote was also reflected in the survey results as more than half (54 per cent) of respond-ents believe they will be worse off in two years’ time.

But looking at the long-term impact, the survey results reveal businesses were largely positive about the future with 38 per cent feeling they will be better off as a result of Brexit over the next ten years.

Respondents were also seemingly upbeat about their investment and em-ployment decisions. A total of 71 per cent said the decision to leave the EU is yet to impact business investment and almost 78 per cent revealed that their hiring intentions are so far unaffected.

Almost 30 per cent of respondents felt that removing the UK from European regulations would provide the greatest opportunity in the coming years, with 18 per cent excited by the prospect of new UK-tailored bilateral trade deals.

However, an overwhelming concern among respondents surrounds Britain’s future trading arrangements, with the Prime Minister having confirmed that the UK will leave the single market and seek a free trade agreement to ensure the “most frictionless trade possible” in goods and services with the EU.

Almost a third of those surveyed felt that continuing free trade with European markets is the number one priority for their business, while 12 per cent said securing trade agreements with countries outside the EU was most important to them.

The EU referendum polarised opinion and it would seem businesses in the South East also have contrasting views on the opportunities that Brexit presents. For some it equals opportunity and optimism whilst for others it continues to mean uncertainty and caution.

56% of respondents were ‘very’ or ‘slightly’ negative about May’s key objective of ‘leaving the single market and looking for a new trade deal’, whilst at the same time a not insignificant 38% were feeling ‘slightly’ or ‘very’ positive.

There was a similar division of opinion on the government’s objective of ‘removing freedom of movement to introduce controlled immigration.’ Appearing to mirror the results from our previous survey in 2016, almost half of respondents felt ‘slightly’ or ‘very’ negative about this objective, while 45% stated they were ‘very’ or ‘slightly’ positive. This is perhaps not surprising given that 57% of survey respondents employ EU nationals in the UK and will no doubt be seeking certainty at the earliest possible opportunity on the status of their employees.

Irrespective of their view point, the survey results suggest South East business leaders remain passionate in their views on Brexit with only 6% indicating they were indifferent to the government’s key objectives.

Leaving the EU remains almost two years away but its impact is already evident with just under 40% of respondents stating that their business strategy has been impacted, citing a variety of reasons from freezing recruitment, delaying transactions and reducing investments, to putting more focus on exports while exchange rates are favourable and expanding into other jurisdictions. However, just less than a third of respondents appear to be taking a watching brief before acting, a view that is reflected by many of the clients we speak to.

As may be expected with the current uncertainty and murmurings from Brussels, 54% of respondents believe they will be worse off in the two years following the UK’s departure from the EU. However, encouragingly, nearly 40% are optimistic that ten years post Brexit their business will be in a better position than it is now.

GAVIN TYLERMANAGING PARTNER

Gavin Tyler, Managing Partner, Cripps

T: +44 (0)1892 506 155E: gavin.tyler@cripps.co.uk

www.cripps.co.uk

Cripps 3rdV.indd 1 20/04/2017 09:43