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Brexit Fears Are Already Dragging on the U.K. Economy

European Union Flags And Union Flags Flying Together As Brexit Vote Date May Be Decided This WeekEuropean Union Flags And Union Flags Flying Together As Brexit Vote Date May Be Decided This Week
The Union Jack flies alongside the EU flag.Photograph by Bloomberg via Getty Images

Big British firms are delaying deals and hiring decisions ahead of a referendum on the country’s European Union membership, a survey showed on Monday, adding to signs that uncertainty around the vote is weighing on the economy.

Chief financial officers are increasingly in favor of staying in the EU, according to the survey of chief financial officers published by accountancy firm Deloitte.

It showed 75% of the CFOs from FTSE 350 and other large private companies backed Britain’s continued membership of the EU in the first three months of this year, up from 62% in the fourth quarter of 2015.

But the survey also showed 83% of CFOs thought the level of uncertainty facing their business was above normal, high or very high, a big jump from 64% at the end of 2015 and the highest level in over three years.

The June 23 referendum represented the biggest single concern for businesses, ahead of slow growth in the euro zone.

“The referendum appears to already be contributing to a slowdown,” David Sproul, chief executive of Deloitte, said. “We have seen a marked slowdown in M&A activity as businesses put plans on hold for now.”

Plans for hiring and capital spending had also decreased, Deloitte said.

Britain’s economic growth slowed in late 2015 but remains stronger than in most other rich countries. Economists say the approach of the referendum is likely to slow growth temporarily but a vote to leave would deliver a bigger hit, at least in the short term.

The Deloitte survey found only 26% of firms had made contingency plans for a possible British exit of the EU, with 53% making no such plans and the rest declining to answer.