Brexit tops the list of SME concerns

By Adrian Gulliver

Confidence among the UK’s small and medium-sized enterprises (SMEs) has fallen by as much as 20% since 2017, with the uncertainty surrounding the UK’s Brexit deal with the European Union (EU) having the most influential impact.

That’s according to a recent report by Dun & Brandstreet, which also found that two-fifths (41%) of SMEs surveyed fear that Brexit could harm their ability to recruit the best possible talent for their business in the years to come.

A further 40% of small business owners surveyed admitted that the Brexit result had already slowed their business growth. It is clear that the majority of UK SMEs are waiting with bated breath about the prospect of Prime Minister Theresa May’s Brexit deal being approved by the Houses of Parliament this month.

Almost two-thirds (64%) of SMEs quizzed admitted that the outcome of Brexit was the most important factor for their long-term success. A deal that involves frictionless trade with the EU is certainly one that would seem to meet approval with British entrepreneurs.

Worryingly, almost a third (31%) of entrepreneurs – Britain’s brightest and most ambitious minds – have considered leaving the UK since the outcome of the EU referendum. The volatility surrounding the pound is doing little to boost business confidence either with 80% of small firms admitting the falling pound against the euro has hurt the bottom line of their businesses in the last 12 months.

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However, the euro hasn’t had all its own way in recent times either. It has struggled against the US dollar, just like the pound. An ongoing dispute between the European Commission and the new Italian coalition over Italy’s draft budget has left more question marks surrounding the Italian economy and its potential to affect the Eurozone and kick-start a second debt crisis.

Nevertheless, despite the uncertainty between the pound and the euro, the majority (54%) of UK-based SMEs surveyed said that the UK remains a great place for new business start-ups to thrive.

The majority (55%) still had every confidence about the future success of their businesses in the UK too.

Tim Vine, head of European trade credit at Dun & Bradstreet, said that the coming months “will continue to be challenging” as the UK edges “towards the Brexit deadline”. However, Vine said that “despite the range of factors at play”, it was encouraging to see that the outlook for the next five years among most UK entrepreneurs was positive.

The Federation of Small Businesses (FSB) recently responded to an assessment of the economic impact of Brexit by the Department for Exiting the European Union (DEXEU) and insisted that a no-deal Brexit should be taken off the negotiating table to provide greater certainty for small firms.

Mike Cherry, national chairman of the FSB, said a “cliff edge” Brexit will “disproportionately be felt by our smaller businesses that do not have the same capacity or resources as big businesses to make adequate contingency plans” in the event of a no-deal scenario.

Cherry concluded by saying that just “one in seven” small businesses were planning for the “extreme outcome” of a no-deal Brexit, which represents “a clear and present threat” to the UK economy.