City finance bosses have said they expect the UK’s business sector to be harmed in the long-term by Brexit, in a stark warning for the Government.

More than eight in ten chief finance officers (CFOs) said they expect the UK business environment to deteriorate because of Brexit, in Deloitte’s latest CFO survey.

The survey of finance bosses for the second quarter of 2019 revealed their greatest level of concern regarding the impact of Brexit since the referendum in June 2016.

Only 4% of CFOs said they think that now is a good time to take a greater risk on to their balance sheet, representing the highest level of caution since the financial collapse in 2008.

The low appetite for risk among large corporates stands in stark contrast to the buoyant mood of equity investors, who have record levels of cash at their disposal.

The survey, which involved 79 CFOs at large UK corporates, also saw 62% of respondents say they expect to reduce hiring over the next three years due to Brexit.

Almost half, 47%, also said they expect to reduce capital spending in the near future.

Ian Stewart, chief economist at Deloitte, said: “Events in the last three years, and recent news suggesting the economy shrank in the second quarter, have added to worries about the impact of Brexit.

“This is not solely a question of the long-term outlook. Brexit has not happened, but it is acting as a drag on corporate sentiment and spending.”

The findings come after the Labour Party and senior economists voiced concern over the UK’s productivity crisis after fresh figures on Friday showed a third straight quarter of decline.

Output per hour fell by 0.2% in the three months to March, compared with the previous year, the Office for National Statistics (ONS) said.

The drop in productivity has added to concerns of a “productivity puzzle” in the UK, which has seen output per hour grow slowly since the 2008 economic downturn.

Henry Saker-Clark is PA City Reporter.