What Does Brexit Mean for UK SME’s?
The uncertainty, politically, about what Brexit means continues apace as the Government fails to find any modicum of consensus for either a hard Brexit, a soft Brexit or any other kind of Brexit scenario. As the Parliamentary arithmetic remains deadlocked, this creates broader uncertainty within the country.
Nowhere is this more relevant than within the offices, factories and shops that make up 60% of the UK’s economy – the SME community. Britain’s small businesses are locked-in with a collision course with a Brexit that they have no idea what it will entail. What will it be and how will it impact their decisions? These questions have yet to be answered and uncertainty is causing major concern within the UK’s business community?
How Will Brexit Affect My Company?
It has been two and a half years nearly since the referendum and it has been months since the exit agreement has been tentatively agreed between HM Government and the European Union – in principle. However, the ‘meaningful vote’ on this agreement failed to gain Parliamentary consensus which lead to political deadline with the clock ticking down to exit day – 11pm on Friday, March 29th, 2019.
Due to the uncertainty around our exit – will it be an agreed exit or a ‘hard’ Brexit, the dynamics that could affect your business vary considerably.
Some businesses who trade across EU borders are already feeling customer uncertainty with people worrying about products/services being delivered if Brexit occurred – and therein the price dynamics of a falling Sterling against a buffered Euro? Furthermore, the end of ‘frictionless trade’ will also incur paperwork when exporting (and importing) goods from the EU. These issues collectively combine to create the main issues faced by UK businesses selling to the EU.
What Are The Main Issues?
Here are some of the main issues that could impact businesses due to Brexit-related problems:
- The Irish Border – Nearly £4Bn worth of goods and services travel across this border every year any border pressures could negatively impact this large volume of trade.
- Rights of EU Workers – SME’s could lose EU employees if Brexit arrangements are not made – to give a statistic, of the UK’s 2.1 million construction workers, 12% are EU citizens.
- Transition Period – The EU-UK agreement provides businesses and citizens with a 2-year transition period that copies the current Status Quo providing some continuation for Just-In-Time supply chains.
- “No-Deal” Realities? A “Chaotic” Brexit could damage jobs, cut growth and ruin the economy according to the Federation of Small Business.
As the exit agreement has yet to gain Parliamentary support, time is ticking for a political agreement that will save the UK from a disorderly exit from the European Union which would hurt the UK’s SME community.