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Investment slowdown a major channel concern

The impact of Brexit on customer investment plans is a major concern for channel partners

One of the biggest fears that the channel would have had going into the EU referendum was that it could make life more difficult if the decision to leave sparked a downturn.

The pound might be dropping and share prices are being hit but there are efforts being made by the Bank of England and the Chancellor to alleviate those issues.

What is of more concern to resellers, particularly those that sell into the financial services sector, is that investment is grinding to a halt while companies try to work out how to react to the decision to leave the EU.

One of the great hopes of this year had been that those magical buzzwords 'digital transformation' would spark some serious spending as more companies looked to connect more of their operations.

But warnings from the Institute of Directors (IoD) and the Chancellor have highlighted that the threat to investment appears to have become a reality.

The IoD  ran a quick survey of its members and found that a quarter are freezing recruitment and 5% are even considering redundancies as firms scale back.

“Businesses will be busy working out how they are going to adapt and succeed after the referendum result. But we can’t sugar-coat this, many of our members are feeling anxious. A majority of business leaders think the vote for Brexit is bad for them, and as a result plans for investment and hiring are being put on hold or scaled back," said Simon Walker, director general of the IoD.

He added that there was "no point crying over split milk" and British firms had the ability to overcome obstacles and succeed.

Adding to the gloomy sense of investment stalling was George Osborne, who broke cover after a few days of silence, to calm the markets but provide a sober assessment of where the UK economy now stood.

"It is already evident that as a result of Thursday’s decision [to leave the EU], some firms are continuing to pause their decisions to invest, or to hire people," he added "As I said before the referendum, this will have an impact on the economy and the public finances – and there will need to be action to address that."

"But no one should doubt our resolve to maintain the fiscal stability we have delivered for this country. To all companies large and small I would say this: the British economy is fundamentally strong, we are highly competitive and we are open for business," he said.

Other business groups that represent the channel's customer base have called for clarity to try to avoid further instability.

“Nearly a quarter of Federation of Small Business (FSB) members export, with the majority exporting to the single market. Access to the single market means access to 500m potential consumers, more than 26m businesses and is worth 11 trillion euros. We call on the Government for clarity on the impact to smaller firms who export wider afield through EU FTA agreements," said Mike Cherry, FSB national chairman.

“These are crucial questions that need to be answered swiftly to ensure the UK’s 5.4m small business confidence does not fall any further, which is already at the lowest levels since 2013.This includes clarity over the practical implications of this result on how smaller firms do business," he added.

Read more on Finance and Credit

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