Monday, 4 April 2016

EU Referendum - Monday Briefing from Deloitte:

* The latest Deloitte survey of UK Chief Financial Officers, released this morning, examines the thinking of some of the UK's largest corporates on the forthcoming referendum on EU membership.

* The survey shows that support for EU membership among CFOs has risen. 75% of CFOs say that it is in the interests of UK business for the UK to remain in the European Union, up from 62% in the fourth quarter of 2015. 8% of CFOs favour leaving the EU, up from 6% in the fourth quarter. 17% of CFOs say they either don't know, have no strong opinion or prefer not to say.

* The EU scores high marks with CFOs for its beneficial effects on UK exports, inward investment and financial services. But at the opposite end of the scale only 15% of CFOs think UK business and the UK economy benefit from the EU's legal, regulatory and compliance framework.

* The EU referendum has become the dominant concern for CFOs. It tops the corporate worry list, eclipsing longstanding concerns about emerging markets and growth in the euro area.

* Brexit-worries seem to be behind a marked increase in CFO perceptions of financial and economic uncertainty. It now stands at levels last seen in early 2013, at the tail end of the euro crisis. Risk appetite has also suffered, with the proportion of CFOs saying that now is a good time to take risk dropping from 51% to 25% in the last year.

* With the storm clouds gathering CFOs have maintained a focus on reducing costs and increasing cash flow. Enthusiasm for expansion has taken a knock. Corporates are pulling in their horns, with expectations for hiring and capital spending at three-year lows.

* Despite growing concerns about the forthcoming EU referendum, 53% of CFOs say they have not made, and are not in the process of making, contingency plans for a possible UK exit from the EU. 26% say they have made, or are making, such plans.

* It may be that the continued, if narrowing, lead for the "remain" camp in the opinion polls, means that many corporates see a UK exit from the UK as being a fairly low probability event.

* This is the 35th quarterly UK CFO survey. 120 CFOs, including 75 at FTSE350 companies, took part. The full report is available at:

Brexit and European politics
* The "What the UK Thinks: EU Poll of Polls", based on the average share of the vote for 'Leave' and 'Remain' in the six most recent polls carried out between 18th March and 1st April shows the Leave vote on 49% and remain on 51% (adjusting for the removal of "don't knows"). The latest poll, published by the Observer yesterday, and conducted by Opinium, shows a lead for the Brexit camp, with Leave at 43%, Remain at 39% and don't knows on 19%. 
* According to the latest political betting odds cited by PaddyPower, there is currently a 35% implied probability of Brexit – up from 31% two weeks ago
* Nearly half of voters (48%) think that David Cameron should resign as Prime Minister if the UK voted to leave the EU in June, according to a new Ipsos Mori poll
* Minutes from the Bank of England's March monetary policy committee meeting show that its members think uncertainty around the EU referendum has been a "significant driver" behind the fall of the pound
* The Bank warned that Britain could suffer a credit crunch following the referendum vote, as prolonged uncertainty could "affect the cost and availability of financing for a broad range of UK borrowers."
* A number of Brexit campaigners blamed the crisis at Port Talbot's steel works on the EU, with UKIP leader Nigel Farage saying "The British government and Welsh first minister are completely impotent on stopping the Chinese dumping of steel on the market."
* The FT reports that a number of property advisers to British buyers of holiday homes in the EU have been asked to include a "Brexit break clause" in their contracts allowing them to pull-out should the UK vote to leave the EU
* Research by Professor Philip Cowley of Queen Mary University of London suggests British voters change their opinion on EU membership when told they would be slightly better or worse off following a Brexit vote, with just £25 a year being sufficient to produce decent majorities in favour of each outcome
* Some bloggers have claimed that the fact that the EU referendum will coincide with the Glastonbury festival is a conspiracy to stop some 135,000 young, festival-going, would-be EU supporters voting to stay in the EU. Euro sceptic Labour MP Kate Hoey said she was, "surprised they think Glastonbury is full of young people…I thought it was full of ageing hippies"

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