After Brexit vote, most CEOs in Britain are looking at relocating
A majority of CEOs in Britain say they are considering moving some of their operations elsewhere so that they may retain ties to EU markets following Britain's exit.
The furor following Britain’s “Brexit” vote has calmed somewhat in recent weeks, as the economic armageddon predicted by some has failed to materialize.
Nevertheless, two new reports into UK-based businesses are prompting forecasts of a gloomy future as this island nation prepares to depart from the European Union.
One report, conducted by the global auditing firm KPMG, found that three-quarters of executives would consider moving their headquarters or some operations out of Britain; another survey, specifically of financial services, showed a drop in optimism for the third consecutive quarter.
"We hear it time and time again that business needs certainty," said Simon Collins, KPMG's UK chairman, in a statement. "Policy makers should be really concerned about a leaching of British business abroad and should engage with business early to understand what assurances they can offer and closely monitor any shifts overseas."
Yet digging into the survey’s results a little more deeply may allay some fears. Alongside the finding that 76 of the 100 executives polled said they would consider moving some part of their business beyond Britain’s shores, 69 of them expressed confidence in the country’s growth prospects over the next 12 months – a larger share than were confident about the global economy.
Moreover, as Eurosceptic blogger Tim Worstall wrote in Forbes, the survey finds only that CEOs are “considering” the future location of operations, not that they have decided to move.
“My point [is] that their job is to consider such things, this is what they are paid for,” wrote Mr. Worstall. “And that consideration is supposed to be a permanent matter. Brexit being just one of those events dear boy, events, which change the economic landscape.”
The second survey, the CBI/PwC Financial Services Survey, sought the opinions of 115 firms in that industry and displayed what Danica Kirka of the Associated Press described as “the longest drop [in optimism] since the global financial crisis in 2009,” having now fallen for three quarters in a row.
Yet this, too, finds a counterbalance in a recent reversal by the Organisation for Economic Cooperation and Development, an intergovernmental organization of 35 wealthy democracies. Having originally predicted dire financial consequences of a vote for “Brexit,” the OECD revised its growth forecast upwards for 2016, after stronger-than-expected performance in the first half of the year.
Nonetheless, as the British government ponders its approach to the forthcoming negotiations over its exit from the EU, consideration of economic consequences, particularly on the financial sector, which provides employment for two million Britons, will likely be topmost on their minds.
As Andrew Kail, UK financial services leader at consultancy PricewaterhouseCoopers, said, the worry is about "the domino effect on people, productivity and position as a financial hub that must be guarded against."
Material from the Associated Press was used in this report.