Results from the Decision Maker Panel survey 2018 Q4

Together with academics from Stanford University and the University of Nottingham, the Bank has developed the Decision Maker Panel (DMP) survey to help monitor recent developments in the UK economy and to track businesses’ expectations and the uncertainty surrounding them.

Overview

Together with academics from Stanford University and the University of Nottingham, the Bank has developed the Decision Maker Panel (DMP) survey to help monitor recent developments in the UK economy and to track businesses’ expectations and the uncertainty surrounding them.1 The responses from the DMP survey complement the intelligence gathered from contacts of the Bank’s Agents.

The panel comprises Chief Financial Officers from small, medium and large UK companies operating in a broad range of industries. It is designed to be representative of the population of UK businesses. Around 6,600 businesses had agreed to be part of the panel at the time of the November survey. The survey runs monthly with panel members receiving one third of a quarterly questionnaire each month. The response rate has averaged around 45% in recent months. Aggregate-level data from the DMP survey are available on the Bank’s website. Please read the Quarterly Bulletin article for details on the methodology. All results are weighted.

On 4 December, a summary of the latest DMP results relating to Brexit was published alongside the results of a survey by the Bank’s Agents to coincide with the Treasury Select Committee hearing on the Bank’s Brexit work. This covered a full set of quarterly data collected between August and October and estimates from November that were based on one third of the sample. The data showed that Brexit had created uncertainty for many businesses and that Brexit’s importance as a source of uncertainty had risen further in recent months (Chart A).

This box provides some extra detail from the August to October surveys on the characteristics of firms that expect to be affected by Brexit and summarises companies’ views on the shorter-term prospects for their businesses.2

Chart A Brexit as a source of uncertainty (a)

Chart A Brexit as a source of uncertainty
  • Sources: DMP and Bank calculations.

    (a) Question: ‘How much has the result of the EU referendum affected the level of uncertainty affecting your business?’. Data for November 2018 are based on only one third of the sample.

Characteristics of businesses affected by Brexit

According to the August to October DMP surveys, around 35% of companies reported that they export goods or services to other EU countries, while around 46% import some products from the rest of the EU. On average, exports to the EU made up 7% of total sales and EU imports accounted for 11% of costs in 2018 Q2 (of all firms, including those who do not export/import to/from the EU). Non-UK EU nationals made up an average of around 7% of the workforce among panel members.3

Businesses who are more exposed to the rest of the EU either through exporting, importing, or employing relatively more staff from other EU countries were more likely than others to view Brexit as an important source of uncertainty (Chart B). Within those who exported to or imported from the rest of the EU, uncertainty levels were higher for those who were more reliant on trade with the rest of the EU.

As well as asking about the uncertainty created by Brexit, the DMP also asked panel members how they expected their sales and employment to be affected by Brexit over the longer term.  No guidance was provided on what to assume about the form Brexit might take. On average, companies attached higher probabilities to Brexit eventually reducing their sales and employment than to increasing them (Chart C).4

Businesses who are more exposed to the EU through trade links or via their use of non-UK EU migrant labour expected Brexit to have a larger eventual impact on their sales and employment than those who are less exposed. Chart D illustrates this using some simple point estimates for the expected eventual impact of Brexit on sales.5 EU exporters, those who import from the EU, and firms who rely more on EU migrant labour all expected Brexit to have a larger impact on their sales in the long term than companies not in those categories.

Chart B Firms who view Brexit as an important source of uncertainty, by exposure to the EU (a)

Chart B Brexit as a source of uncertainty by exposure to the EU
  • Sources: DMP and Bank calculations.

    (a) Brexit uncertainty question is defined in the footnote to Chart A. Chart shows the percentage of firms who responded ‘Largest current source’ or ‘One of 2 or 3 top sources’. Uncertainty data and information about whether a company exports or imports any goods or how many non-UK EU migrants it employs were collected between August and October 2018. If information about imports, exports, or the share of non-UK EU migrant labour was missing, responses from earlier surveys were used.

Chart C Expected eventual impact of Brexit on sales and employment (a)

Chart C Expected eventual impact of Brexit on sales and employment
  • Sources: DMP and Bank calculations.

    (a) Question: ‘How do you expect the eventual Brexit agreement to affect your sales/employment once the UK has left the EU, compared to what would have been the case had the UK remained a member of the EU?’. A large positive/negative effect corresponds to adding/subtracting 10% or more to/from sales/employment; a small effect is defined as less than 10%. Data are for August to October 2018.

Chart D Expected eventual impact of Brexit on sales by exposure to the EU (a)

Chart D Expected eventual impact of Brexit on sales by exposure to the EU
  • Sources: DMP and Bank calculations.

    (a) Question about the impact of Brexit on sales is defined in the footnote to Chart C. Expected impact of Brexit on sales data and information about whether a company exports or imports any goods or how many non-UK EU migrants it employs were collected between August and October 2018. If information about imports, exports, or the share of non-UK EU migrant labour was missing, responses from earlier surveys were used.

The short-term outlook for sales growth

Over the past few quarters, companies’ realised annual nominal sales growth appears to have held up and the short-term outlook for sales growth remains broadly unchanged.

Firms who responded to the sales questionnaire between August and October reported average nominal sales growth of 5.6% in the year to 2018 Q2, and those sampled in November reported slightly lower growth of 5.1% over the year to 2018 Q3 (Chart E). Firms who responded to the November survey expected sales growth to slow slightly to 4.6% over the year to 2019 Q3. In 2018, achieved and expected sales growth rates were relatively similar for exporters and non-exporters, whereas in earlier surveys exporters had reported higher sales growth.

Chart E Average expected and realised nominal sales growth (a)

dmp-box-chart-e
  • Sources: DMP, ONS and Bank calculations.

    (a) Questions about sales refer to the last complete quarter. Realised data for 2018 Q3 and expected data for 2019 Q3 were collected in November and are based on data for one third of the sample only.

  • 1 This project is supported by the Economic and Social Research Council (grant number ES/P010385/1).

    2 For more in-depth analysis please visit https://doi.org/10.1111/1475-5890.12179

    3 Calculations are based on responses to the question ‘Approximately what percentage of your employees were immigrants from the rest of the EU (…) in the latest quarter?’. Respondents could choose one of the following  options: (a) Less than 1% (b) 1% to 5% (c) 6% to 10% (d) 11% to 20% (e) 21% to 50% (f) More than 50%; with the last two categories being merged into one. Values of 0.5%, 3.25%, 8%, 15.25%, and 27% were used as mid-points for the five categories and were multiplied by corresponding share of respondents to arrive at the average value.

    4 Chart C shows data for August to October 2018. The sales question was also asked in November 2018. The 4 December report shows that the responses were little changed from August-October. The employment question was not asked in November 2018.

    5 A point estimate for the expected eventual impact of Brexit on sales for each firm is constructed by multiplying simple mid-points for the five response categories shown on Chart C by the probabilities assigned to them. Values of ±20% are used for a large positive/negative impact and ±5% for a small positive/negative effect. Zero is used for no impact. 
This page was last updated 20 December 2018
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