Leaving the European Union (‘EU’) would have a negative impact on most of Britain’s biggest businesses, according to FTSE 100 chairmen.
Responding to the latest ‘Boardroom Pulse’ survey conducted by Korn/Ferry Whitehead Mann, an overwhelming majority (81 percent) of respondents to the Boardroom Pulse survey, which was created to give FTSE 100 Chairmen a collective voice on the topical business and governance issues of the day, believe that the referendum announced by the Prime Minister in January would not result in Britain leaving the EU. However, nearly three quarters (74 percent) believe that should Britain leave the EU, there would be a negative impact on their business. One chairman suggested that “the UK’s loss of its seat at the table would obliterate our ability to help resolve the deep structural flaws in the EU” and another suggested that over the next 25 years “Britain would lose all significant world influence” and “shrinkage in the City of London would become permanent.”
This view is not universal, however, with nearly a quarter (23 percent) arguing that departure from the EU would have no impact on their business, and a small number (3 percent) saying it would have a positive impact. One chairman believed that “if trade links are kept open there may be some short-term effects but long-term, not much” and another suggested that while “to be relieved of simply mad European-led regulation would be a bonus”, they would be concerned about “the negative effect on the UK economy of being outside of its largest trading market.” The survey reveals much less concern about the loss of the UK’s AAA credit rating, with nine out of ten respondents (91 percent) saying it will have no impact on their business. One chairman suggested that “the rating agencies no longer have the credibility to drive debt market sentiment alone.” Another commented that while it would make no difference in the short-term, when the economy starts to grow in earnest “it will have a more significant cost for the UK.”
Dominic Schofield, Senior Client Partner with Korn/Ferry’s Board Practice, commented: “A clear majority of the UK’s business leaders believe that their companies would be adversely affected if the UK was to leave the European Union. Though they overwhelmingly believe a departure is unlikely, if it were to happen there is a strong feeling that there is a need to ensure the continuation of favourable trading terms with EU countries. Given the importance to our economy of ensuring that our best businesses succeed on a global playing field in the coming years, our political leaders will need to work hard to carry business opinion with them in any re-negotiation efforts.” FTSE 100 Chairmen who responded to this Boardroom Pulse survey represent companies with a combined market capitalisation of £557.9bn, combined company assets of £3.8tr and over two million employees.