Published: 08:00, 08 August 2016
Companies were bracing for a hit to their bottom line before the nation voted for Brexit, a survey of bosses has found.
Profit expectations for the year ahead were much weaker among firms questioned between April and June, in a study carried out by Kent Invicta Chamber of Commerce.
More than a fifth (21%) of 102 bosses surveyed in the county expected their bottom line to worsen, up from 18% in the last two quarters.
Only 48% predicted an improvement over the next 12 months, down six points, said the chamber’s Quarterly Economic Survey.
Fewer companies expected turnover to increase over the next year, with 56% predicting improvements, its lowest level since the second quarter of 2013.
Meanwhile, firms expecting sales to worsen remained relatively constant at 13%.
“It is surprising to see fewer than half of respondents expecting profits to improve and even more surprising that one in five expect them to worsen,” said the Kent Invicta Chamber report.
James Gransby, partner at accountancy MacIntyre Hudson in Maidstone, said: “Any time there’s uncertainty within the economy, the markets tend to lean towards the sceptical.
“They want certainty and now we may see this pick up as people adapt to the changes the exit from the EU brings.
“Although it’s going to be a different world, now we have a new Prime Minister and we know what the decision is.
“We are still part of the EU in the medium term. Free trade will continue until we trigger Article 50. If businesses over here are making a product which people need, then trade will continue.”
Dr Wayne Wright, managing partner of business growth consultancy [W]sq solutions in Maidstone, said: “People hadn’t sat down and thought about the impact of Brexit on their business.
"There was a lot of uncertainty so they would rather be cautious than bullish about their prospects.”
Prof Richard Scase, an economist at the University of Kent, said: “The reason sales will drop or remain stable is because uncertainty affects morale in a business.
“Bosses tend to stay back from negotiating because of the unknown. You batten down the hatches for fear that something dramatic will happen and you stay as you are.
“I expect to see more spending on infrastructure from the Government because building companies have taken a hit since Brexit.”
Maidstone law firm Brachers said part of the uncertainty comes from companies being unsure how future commercial agreements will work.
It expects many technical details to come under review following the Brexit vote, including governing law clauses and jurisdiction clauses.
James Bullock, head of corporate and commercial at the firm, said: “European companies may potentially avoid creating agreements governed by English law and may feel unease at the English courts having a right to determine disputes as it may lack the protection of the uniformed European rules. Both UK and European firms will therefore need to carefully consider these elements when entering into future contracts.”
More from the Quarterly Economic Survey
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