UK businesses show signs of tension as Brexit looms again

RSM’s UK Brexit Stress Index nudged up for the first time since the early days of the Covid-19 lockdown, ushering in the first signs in nearly seven months that the risk of no-deal trade talks with the EU is generating increased nervousness within business.

Last week the pound also saw its worst performing week against both the dollar and the euro since March amid fears that Britain will reach the end of the Transition period without a deal.

The Stress Index, which measures wider financial and economic stress or risk to business, had been indicating reduced stress levels as readings moved steadily down from a high of 4.9 in March to 1.27 at the start of September. This week though, the index tipped upwards to 1.35. 

Brexit stress index timeline

Simon Hart, lead International Partner at RSM UK, comments: ‘Our Stress Index has reversed its sustained downward curve. The uptick is marginal, but it’s telling. The global pandemic presented a monumental distraction, and still does, but Brexit never went away, and it seems now that businesses are taking note of the realities and potential impacts as they swing into view.

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‘A new trade deal with Japan and evidence of an economic recovery from May through to July have done little to steady nerves. Last week the pound dipped to its lowest level against the dollar and euro since the ‘dash for cash’ market sell-off in March, as lockdowns loomed and economies crashed. The UK/EU political standoff isn’t helping. The government has drawn up legislation that would overturn last year’s Withdrawal Agreement and Brussels is threatening legal action if the proposals are not withdrawn. That’s not helping middle market business sentiment when it comes to the future prospects of UK trade and business beyond 31 December. On a more positive note, at least both parties’ negotiators are still talking.’



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