'Brexit' vote out of favour with FTSE 350 firms

London – Support for the UK remaining a member of the European Union (EU) has risen among chief financial officers (CFOs) of the UK’s largest companies, according to research conducted by Deloitte, the accountancy firm.

In all, 120 CFOs of FTSE 350 and other large private companies participated in the first quarter 2016 CFO survey.

Repeating a question asked in the second quarter and fourth quarter 2015 Surveys, Deloitte asked CFOs whether they believed it was in the interests of UK businesses for the UK to remain a member of the EU.

The survey found 75 percent favoured the UK remaining in the EU, up from 62 percent in the fourth quarter of 2015 and 74 percent in the second quarter.

Intriguingly, 17 percent were uncertain of their position or preferred not to say, up from 4 percent in the fourth quarter of 2015.

CFOs were also asked how they believe EU membership had benefited the UK economy and UK businesses.

The survey found that 89 percent said membership helped UK export performance and 86 percent said it attracted foreign direct investment.  All these results were broadly unchanged since this question was asked in the second quarter 2015 survey.

David Sproul, senior partner and chief executive of Deloitte, said: “These results show a high level of support among chief financial officers for the UK remaining a member of the European Union.

“CFOs see significant benefits in UK membership, particularly in terms of helping UK exports, attracting investment and strengthening the UK’s influence and connections with the wider world.

“However, we are already seeing the unsettling effect of the referendum on business sentiment. Our survey shows declining risk appetite among CFOs, with the referendum rated as the top risk their business faces, and we have seen a marked slowdown in M&A activity as businesses put plans on hold for now.”

The study found that 78 percent of CFOs said the UK benefits from the free movement of people, down from 87 percent in the second quarter of 2015.

In addition, 26 percent of CFOs said their company has made, or is in the process of making contingency plans for a possible British exit of the EU. However, 53 percent have made no such plans.

Ian Stewart, chief economist at Deloitte, said: “A fog of uncertainty has descended on the corporate sector. Perceptions of financial and economic uncertainty are back to levels last seen in early 2013 as the euro crisis abated.

“Now the dominant concern is the EU referendum, which tops the corporate worry list, eclipsing longstanding concerns about emerging markets and growth in the euro area.

“Rising uncertainty has eroded corporate risk appetite. Corporates are pulling in their horns, with expectations for hiring and capital spending at three-year lows.”

The 2016 first quarter survey took place between 8-21 March. The combined market value of the 84 UK-listed companies surveyed is £360bn, or approximately 17 percent of the UK quoted equity market.