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Swiss companies make contingency plans amid Brexit uncertainty

Swiss companies make contingency plans amid Brexit uncertainty

As the Brexit saga continues, Swiss companies are preparing for the worst and hoping for the best. But optimism is waning among companies that are trying to minimise disruptions from any deal/no-deal scenarios.

With the UK’s departure from the EU scheduled for March 29, British Prime Minister Theresa May on Wednesday asked the EU bloc to postpone the UK’s departure until June 30. If accepted, it prolongs the three-year guessing game for yet another three months.

Although a post-Brexit trade deal signed by the UK and Switzerland in February assuaged some concerns, the uncertainty surrounding Brexit is nevertheless testing the patience of many Swiss companies with significant business dealings in the UK.

Deloitte consulting firm’s latest surveyexternal link of the mood of more than 100 Chief Financial Officers (CFOs) at major Swiss companies found that optimism about the Swiss economy and company prospects is dwindling. In general, more CFOs are pessimistic than in the previous survey in September, with protectionism and geopolitical factors playing a more prominent role in their outlook.

The political uncertainty created by Brexit remains at the top of the CFOs’ agenda. Overall, 74% of them expressed concern about the situation, compared with 61% in the previous survey.

A large majority of the executives solicited (81%) expect a recession in the UK within the next two years.

“The fear of recession in the UK by Swiss companies is surprisingly high,” said Michael Grampp, Deloitte’s chief economist. There are concerns that the bleak prospects in the UK could also affect the Swiss economy.

Earlier this month, the Swiss Global Enterprise association wroteexternal link that “depending on how the UK’s withdrawal from the EU is structured, there could be indirect consequences for international companies based in Switzerland and Liechtenstein. It remains uncertain how the economic situation will develop in these two markets, how demand for Swiss goods will be affected and whether value chains will need to be reorganised.”