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Brexit bites into UK firms' hiring and capex plans

Brexit
Justin Tallis | AFP | Getty Images

British businesses continue to be plagued by fears of what shape the U.K. economy will take after it has quit the European Union, according to two polls released Monday, which confirm uncertainty is still hampering activity and sentiment.

A survey from the British Chamber of Commerce (BCC) which aggregates the view of over 7,000 companies, mostly via email and an online platform, indicated that those surveyed had reduced their expectations for hiring, turnover, and investment in plants, machinery and training.

Although the results were more negative than in the months running up to the referendum, they did show an overall uptick from responses collected in the immediate wake of the vote, suggesting U.K. data in recent months showing a surprisingly resilient domestic consumer and a recovering construction sector had helped a partial recovery of sentiment.

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Nonetheless, the government still has a big role to play in helping to restore confidence to business, according to Dr. Adam Marshall, Acting Director-General of the BCC.

In a phone call with CNBC, Dr. Marshall said, "While there is a lot of uncertainty in the U.K.'s relationship with the EU, the government can give certainty by greenlighting infrastructure project, lowering business costs and rolling back the tone of interventionism which has concerned many firms in recent weeks."

He added that companies would be looking to the autumn statement by the government's finance secretary Phillip Hammond for "assurances of the government's intention to support continued business growth and success at a time of transition and change."

The BCC's survey results follow an open letter sent to the government over the weekend from the Confederation of British Industry (CBI) in conjunction with other bodies representing U.K. trade, calling for state leaders to negotiate the best deal possible.

The letter contended Brexit terms must "ensure stability, prosperity and improved living standards." It also called upon the government to deliver "barrier free access" to the EU's Single Market, calling this requirement "vital to the health of the U.K. economy".

An SUV moves through the assembly line at the General Motors Assembly Plant in Arlington, Texas.
Mike Stone | Reuters
An SUV moves through the assembly line at the General Motors Assembly Plant in Arlington, Texas.

A further survey released Monday from professional services firm Deloitte which polled 124 finance directors from the U.K.'s largest companies via an online platform, confirmed the potential fallout from Brexit took pole position as the single biggest concern during the last quarter.

The survey also repeated the message from the BCC survey - which unlike the Deloitte survey focused on smaller companies - that bosses anticipate cuts to capital spending and hiring in the year ahead.

Ian Stewart, chief U.K. economist at Deloitte, in emailed comments to CNBC, joined calls for the government to do more, saying "The U.K. ranks as a highly attractive place to do business internationally, but there are areas of relative weakness."

"On infrastructure and vocational and secondary education, for instance, the U.K. punches below its weight. An ambitious pro-growth agenda would sends a signal that the U.K. is determined to improve the environment for business," he contended.

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