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A new study from the University of Nottingham will show how Brexit is really affecting businesses in the UK, and what the future holds for companies in a post-Brexit world.
The study will measure the impact of Brexit on investment, productivity, sales and employment.
The School of Economics at the University will be carrying out the three-year Brexit uncertainty study supported by funding of almost £1.3million from the Economic and Social Research Council (ESRC), the Bank of England, Stanford University and the University of Nottingham.
In July 2016, the team at Nottingham set up a Decision Maker Panel (DMP), with the aim of recording business uncertainty following the referendum decision to leave the EU. This new funding will mean that survey can be continued for a further three years
Using the monthly online survey, the team are able to ask CFOs and CEOs from over 2,500 companies across the country about their current business conditions. The leaders are asked for their expectations on sales, employment, investment, investment spending, and their thoughts around these values in relation to Brexit.
Special questions are also asked around key areas of concern such as – ‘what is the importance of Brexit to their firms’.
So far the survey has already uncovered that:
- Brexit is a major source of uncertainty for firms
- Most firms expect a negative impact of Brexit on sales, investment and higher costs
- A sizeable number of firms are considering moving some operations abroad
- Brexit may be lowering aggregate productivity growth
Professor Paul Mizen from the School of Economics at the University of Nottingham is the lead researcher on the study, along with Nick Bloom of Stanford University. Professor Mizen says: “Since the British public voted to leave the EU in June 2016, many commentators have been surprised by the UK’s economic performance. So far we are yet to see the sharp downturn in investment and growth which was predicted by many economists at the time, but the shadow of Brexit is still hanging over UK businesses.
“A year on from the vote, we are now in a better position to work out what is happening. The Decision Maker Panel survey enables us to ask the leaders of UK businesses how Brexit is already affecting them. Thanks to the additional funding from the ESRC we are now able to continue this important work for a further three years to clarify what the biggest concerns around Brexit are for UK businesses.”
As the DMP reaches its first anniversary, the team will shortly start to release data each quarter alongside with the Bank of England Agents’ reports. The Bank of England and particularly the Monetary Policy Committee has been using DMP information to gauge the level of economic uncertainty around business decisions and is therefore able to adjust its policy response accordingly.
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.”