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Brexit may lead to recruitment freezes

Over a third (36%) of IoD members say the outcome of last Thursday’s vote will cause them to cut investment in their business

A quarter of Institute of Directors (IoD) members say the result of the EU referendum will cause them to put a freeze on recruitment, according to a post referendum survey.

Five percent said the result would cause them to make redundancies, but 32% said their hiring would continue at the same pace.

Nearly two-thirds (64%) said they thought Brexit would be negative for their business, compared to 23% who think it is positive.

Over a third (36%) said the outcome of last Thursday’s vote will cause them to cut investment in their business, against one in 10 (9%) who say they will increase investment. Just under half (44%) say it will not change their investment plans.

Simon Walker, Director general of the IoD, reminded those unhappy with the result that “there is no point crying over spilled milk.”

“We will not lose our faith in the ability of British firms to overcome these obstacles, but these results highlight the importance of the Bank of England maintaining stability in the financial system. It is crucial that the banks do not starve businesses of cash,” he said.

“Businesses have a clear message to those who may wish to replace David Cameron as Prime Minister: during the referendum campaign we were promised an open and outward-looking country after Brexit, now it must be delivered.”

Looking to the future, when directors were asked what arrangement they would consider optimal in place of full EU membership, 40% hoped for a bilateral trade agreement similar to what the EU already has in place with Canada.

Over a quarter (28%) hoped the UK could join the European Economic area, similar to Norway and Iceland, which would allow the UK to preserve its existing Single Market access level. Less than one in 10 (9%) believed the optimal result would be to rely on agreements under UK membership of the World Trade Organisation.

“Businesses will be busy working out how they are going to adapt and succeed after the referendum result,” added Walker. “But we can’t sugar-coat this, many of our members are feeling anxious. A majority of business leaders think the vote for Brexit is bad for them.”