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Brexit uncertainty is a key threat to fragile global business confidence


22 Aug 2016


Euro & Finance
Global Europe
UK in Europe

Latest quarterly global survey from ACCA and IMA reveals a subdued sentiment, with many more firms scaling back investment. Dip in confidence across the OECD linked to Brexit uncertainty, which is set to continue as the UK commences a complex multi-year process to extricate itself from the EU. OECD woes partially offset by improvements elsewhere with China looking less likely to suffer a large currency devaluation, and the US enjoying healthy consumer confidence and unemployment figures

See Global Economic Conditions Survey Report: Q2, 2016

The latest Global Economic Conditions Survey from ACCA (the Association of Chartered Certified Accountants) and IMA (Institute of Management Accountants), released today, offers an early indication of how uncertainty will effect OECD economies, with business confidence subdued despite an improving global outlook. Responding to the findings, Faye Chua, ACCA head of business insights said,

‘Fears of global recession seem to have eased over the past quarter as China’s currency stabilises, the US enjoys a consumer-led recovery and commodity prices have started to rise. Yet low levels of confidence across Europe in the run-up to the UK referendum has offset some of those fragile gains as jittery markets from the US, UK and across the emerging world suffer declines.’

Faye Chua adds that outside of Europe, there had been cautious grounds for optimism in business confidence:

'GECS showed that business confidence picked up a little, having hit a four-year low in the first quarter. The number of firms that said their prospects have deteriorated over the past three months fell to 43%, in Q2, from 48% in Q1.'

Raef Lawson, vice president of research and policy at IMA, also noted:

'The improvement was driven by non-OECD economies. Commodity-producing economies in particular have benefited from recent price rises with optimistic expectations of government spending in Africa and the Middle East, where governments are reliant on commodity revenues.

'Although there has been a slight rise in confidence it is yet to translate into meaningful increases in capital expenditure and employment indices. Half of firms are still either cutting or freezing employment, while only 13% are increasing investment in staff. Only 16% of businesses reported they are increasing investment in capital projects, compared with 41% that said they are reducing it.'

Faye Chua anticipates the potential impact of Brexit will be felt globally for the foreseeable future:

'It would not be a surprise if business sentiment fell again in Q3. And the potential for long-term uncertainty as the UK negotiates its complex departure from the European Union could weigh down on global confidence for some time to come.'

Fieldwork for the Q2 2016 GECS took place between 3 and 20 June, and attracted more than 1,200 responses from ACCA and IMA members around the world, including more than 130 CFOs. Nearly half the respondents were from small and medium enterprises, with the rest working for large firms of more than 250 employees.

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Notes to Editors

About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 188,000 members and 480,000 students in 178 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 100 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: