Companies in the United Kingdom are spending less and scaling back plans because of Brexit fears that have pushed business confidence to its lowest level in a decade.
The dire outlook was revealed Monday in surveys published by Deloitte and the Institute of Chartered Accountants in England and Wales.
Deloitte found that chief financial officers have adopted their “most defensive strategy stance in nine years.” Revenue growth expectations have dropped to their lowest level since 2016.
Nissan (NSANF) on Sunday provided one of the clearest examples of the damage Brexit uncertainty is doing when it scrapped plans to build its new X-Trail SUV in England.
Britain is scheduled to leave the European Union in 53 days, but progress toward an exit agreement has stalled because of deep political divisions in the United Kingdom. It’s unclear how Britain will trade with its biggest export market after March 29.
The 110 chief financial officers surveyed by Deloitte said that Brexit was the top risk to their businesses, which have a combined market value of £390 billion ($510 billion).
Some 80% said they expect the business environment to be worse as a result of Brexit, and more than half of those surveyed said hiring will slow.
Many companies are now calling for Brexit to be delayed. That would mean more uncertainty, but it would avoid the severe economic consequences of crashing out of the bloc without an agreement.
McDonald’s (MCD) and KFC (YUM) joined last week with UK supermarkets to warn that a disorderly split would result in “significant” disruptions to their supply chains. Airbus (EADSF) and Ford (F) have also released stark warnings in recent weeks.
Ian Stewart, chief economist at Deloitte, said that risk appetite is at “recessionary levels” as companies continue to prepare for the worst.
“This survey shows that uncertainty over Brexit is driving a marked shift towards defensive balance sheet strategies among British businesses,” he said in a statement.
The Institute of Chartered Accountants in England and Wales found that business confidence is now at “its lowest level for nearly a decade.”
“Companies at the moment are unclear about the future,” Michael Izza, the group’s CEO, said in a statement. “As the [Brexit] roulette wheel continues to spin, UK plc is having to place its bets based on best guesswork.”
The survey results were based on 1,000 telephone interviews with members of the accounting group.