The business of Brexit
Good decisions require good data. And never more so than now, as the UK heads into the uncharted waters of Brexit and policymakers search for the information that will allow them to make the best decisions for the country.
Leaving the EU and the terms under which we leave could present a substantial shock to business conditions, affecting decisions over investment, employment, location, exporting and importing through supply chains.
This was the impetus for Professor Paul Mizen to create the Decision Maker Panel: a wide-ranging project to assess the impact of Brexit on British businesses. It is now one of the largest regular business surveys in the UK and receives thousands of responses from business leaders every month.
Set up in the wake of the 2016 EU referendum in collaboration with the Bank of England and Stanford University, the Decision Maker Panel is a regular online survey of 8,000 UK chief executives and chief financial officers, providing detailed data by region, industry and firm size to measure UK investment, productivity, sales, employment and uncertainty. The findings have been used to provide insights into the appropriate monetary policy response by the Bank of England’s Monetary Policy Committee, to explain the effects of Brexit uncertainty on the UK economy in official publications, speeches, evidence to Parliament and to the public through the media.
A few stats...
|of businesses said Brexit was among the top three sources of uncertainty
|UK chief executives and chief financial officers regularly surveyed
fall in investment linked to anticipation of Brexit
Recent data outlined the scale of uncertainty created by the Brexit process. Findings included:
- More than half (54%) of businesses said Brexit was one of their top three sources of uncertainty
- Anticipation of Brexit is estimated to have gradually reduced investment by about 11% over the three years since the June 2016 vote
- Reduced UK productivity by between 2% and 5% since the referendum
Professor Mizen, of the School of Economics, said: “The fall in investment took longer to occur, with the effects building gradually. In contrast, forecasts made in the aftermath of the referendum predicted that investment growth would fall sharply within the first year after the Brexit vote and then recover.
“However, thousands of business leaders who have responded to our questions have reported that uncertainty persists around the impact of Brexit on labour, regulations, demand, customs and supply chains. The effect on productivity is significant and one potential reason for the negative impact on firm productivity is the use of senior management time on preparing for the UK’s exit from the EU.”
"The thousands of business leaders who have responded to our questions have reported uncertainty around the impact of Brexit on labour, regulations, demand, customs and supply chains"
The results of the Panel have been discussed with HM Treasury and other Government departments. They are extensively used by the policy committees of the Bank of England.
The impact of the Panel has been recognised by Andrew Haldane, Chief Economist of the Bank of England and member of the Monetary Policy Committee (MPC).
He said: “The information gathered by the Decision Maker Panel has been a key source of information for the MPC… in assessing how the process of exiting the EU might affect behaviour of UK firms now and in the future.
“It is an excellent example of policymakers, academia and the private sector collaborating to improve our understanding of the economy.”
Paul Mizen is Professor of Monetary Economics and Director of the Centre for Finance, Credit and Macroeconomics. He is a consultant to the Bank of England and based on his work on the Decision Maker Panel was appointed as a Fellow of the Office for National Statistics, Fellow of the Royal Society of Arts and Fellow of the Academy of Social Sciences.