Recent collaboration between Professor Paul Mizen, School of Economics, University of Nottingham, the Bank of England and Stanford University has led to the development of the Decision Maker Panel (DMP). This survey involves more than 2,500 UK Chief Financial Officers (CFOs) to provide direct insight into business expectations and subjective uncertainty about sales, investment, employment, costs and prices. The Decision Maker Panel also includes questions on topical policy issues such as the effects of Brexit. The project has £1.3m funding for three years from the ESRC and other sources.
The most recent results of the survey were released on 20 September, the Bank of England began releasing quarterly data and an economic interpretation of the results. The DMP clearly flags up that businesses are becoming more focused about Brexit as a source of uncertainty. Comparing results from August 2017 with findings gathered a year ago, the proportion of respondents that say Brexit doesn't matter has more or less halved, and now 40% say it is one of the top 2-3 concerns for business. The new data show past changes and future expected changes in key business data as well as measures of uncertainty.
On 25 September an article by Chris Giles of the Financial Times took up this point and using data from the DMP argued that British businesses are increasingly concerned that Brexit will hit sales and raise costs and some have already made the decision to relocate part of their businesses overseas. Companies operating in the real estate, wholesale, retail and professional services sectors have greater worries about Brexit than other sectors, possibly because they face headwinds earlier than other sectors such as health and transport.
The DMP survey has been explained in detail in the Bank of England Quarterly Bulletin and it provides inputs to the Monetary Policy Committee decision making process at the Bank of England. Andrew Haldane, Bank of England Chief Economist and MPC member says "The information gathered by the Decision Maker Panel has been a key source of information for the MPC over the past year in assessing the how the process of exiting the EU might affect the behaviour of UK firms now and in the future. I am delighted that funding has been obtained for this important project to progress further over coming years. It is an excellent example of policymakers, academia and the private sector collaborating to improve our understanding of the economy."
Posted on Tuesday 26th September 2017