Major British businesses’ appetite to take on financial risk has fallen to its lowest level in nearly a decade due to fears of “the hardest of Brexits” and rising U.S. protectionism, a survey by accountancy firm Deloitte showed on Monday.
The world’s fifth-largest economy is less than eight weeks away from leaving its biggest trading partner, the European Union, and British lawmakers have so far refused to back a transition deal negotiated by Prime Minister Theresa May.
Without a deal, businesses fear that major delays at ports for customs and other checks will disrupt supply chains and even lead to shortages of food and other essentials.
“Corporates are positioned for the hardest of Brexits, with risk appetite at recessionary levels and an intense focus on cost control,” Deloitte‘s chief economist, Ian Stewart, said.
A survey by the Institute of Chartered Accountants in England and Wales (ICAEW), also released on Monday, showed falling sentiment too and pointed to first-quarter economic growth of just 0.1 percent, the joint-weakest since 2012.
Businesses are not just afraid of short-term disruption: 78 percent of the 110 companies surveyed by Deloitte said they expected Brexit to damage the economy over the long term, compared with just 10 percent who expected an improvement.
Last week, the main trade body for Britain’s automotive sector said a no-deal Brexit would cause “permanent devastation,” and carmaker Nissan is expected to cancel previously announced UK investment imminently.
Less than 10 percent of chief financial officers surveyed in the Deloitte survey said now was a good time to take greater risk on to their balance sheets, the lowest in over nine years.
Brexit was identified as the top risk, followed by trade wars triggered by U.S. protectionism and broader weakness in British domestic demand.
The Deloitte survey polled chief financial officers from major UK-listed companies with a combined market value of 390 billion pounds ($510 billion), as well as UK subsidiaries of large foreign firms, between Jan. 8 and Jan. 24.
The ICAEW polled 1,000 accountants between Oct. 22 and Jan. 18. ($1 = 0.7641 pounds)