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Confident of an uncertain future – by Philip King FCICM

29 March 2018

The Federation of Small Businesses (FSB) published the results of its most recent survey this week and they were something of a surprise. After each quarter of 2017 showed a decline in confidence, the first survey of 2018 is surprisingly upbeat. More than 70% of the 1,218 organisations surveyed expect their performance to improve or remain the same over the next three months, and only 25% lacked confidence about the next quarter. One third said they were planning to increase investment (the highest level for two years), and half expect to expand operations over the next twelve months. The FSB attributes the start of a return to optimism to lower inflation and progress on Brexit talks.

This is encouraging news yet I’m surprised that the increasing predictions for an interest rate rise, or two, this year did not dampen views. And I’m slightly mystified that the Brexit talks progress is considered so significant. We’re a year away from the Brexit deadline and, although I’m pleased that we are a least seeing a little progress, there are still far more questions then answers.

I was privileged to be at a CICM Northern Ireland branch event in Belfast last week and enjoyed listening to a speech by Lord Empey. He knows much more about government and Brexit than I can ever hope to. His view was that we won’t know what ‘the deal’ is until hours, if not minutes, before the deadline. He likened the Brexit negotiations to the Good Friday agreement negotiations, in which he played a key role, and suggested that anyone who said they knew what the deal would look like in advance was kidding themselves and their audience.

There are innumerable issues to be negotiated and, even when we see progress as with the announcement last week about the transition period, it is invariably accompanied by a dose of reality. Ask the fishing industry and communities who hoped the UK would gain control of its waters on Brexit day, 29 March 2019. MIchael Gove said the government had pressed for the UK to be an equal partner in fishing negotiations during the 21-month implementation period but the EU had blocked this. “We were disappointed the EU would not move on this,” he told MPs.

The next year is going to be a series of two-steps forward and one-step back, or one step forward and two-steps back. My money is on Lord Empey’s analysis and we’re a long way from any certainty. I’ll be interested to see the results of the next FSB survey and to see whether the optimism has remained. I hope so.

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