UK SME business owners have voiced their concern that what they want and what they are going to get from the Brexit process is going to be very different, according to the latest data from Close Brothers Asset Finance.
The survey of 900 firms conducted in April 2019 shows that while four in 10 respondents want the UK to leave the EU, only 27% think it will actually happen; a further 27% want the UK to remain in the EU while just 12% think this will be the eventual outcome.
There is the least appetite for a long extension to Article 50 although close to a quarter are convinced this is the most likely result.
“The results are consistent across region, sector and company size,” said Neil Davies, CEO, Close Brothers Asset Finance. “What this tells us is that they aren’t, for example, confined to a specific area and skewing the overall results.
“There is a clear disconnect between what business owners want for their firm and what they think they will eventually get, which is not surprising given the number of options still on the table. Business owners are saying that the likely outcome of the least palatable option - a long extension to Article 50 – is continued uncertainty.”
Preparations for Brexit
Respondents were asked to select the types of preparations that they had made in advance of Brexit – nearly half (45%) admitted to having made none at all.
“The results aren’t as alarming as they might sound on initial reading,” said Neil. “Many firms – particularly those at the smaller end of the scale – have very limited dealings with the EU, so it stands to reason that they don’t feel there’s much they need to do.
“That said, 78 firms admitted to having set-up an EU company or subsidiary with 98 also changing their systems to reflect the change in the UK’s status for trading with the EU.
“All of this comes at a cost, both financial and in terms of time spent on the preparations.”
Companies that do have a relationship with Europe spread their preparations across a number of tasks, including (response totals in brackets):
- Setting aside a cash buffer to cover possible cost increases (147)
- Increasing stocks we hold of our finished goods (141)
- Working with our EU customers (who will become importers) to adapt their systems (134)
- Changing contracts with EU customers or suppliers to take account of data regulations (108)
- Changing our systems to reflect the change in our status for trading with EU (98)
- Have had to certify products in the EU (86)
- Setting up an EU company or subsidiary (78)
- Hedged foreign currencies (66)
- Other (18)
Impact on staffing
For most firms Brexit has had no impact on their staffing requirements; however, 127 have had to redeploy staff within their organisation and 103 increase the hours worked by staff; 189 have either taken on more employees or had to bring in external contractors.
“For most smaller businesses the impact of Brexit is still an unknown and as such they have little idea of what it means for their staffing levels,” said Neil.
Proportion of business with the EU
Around three quarters of UK firms have at least some exposure to the EU on both the procurement and sales side, with 30% of SMEs reliant on Europe for 60% or more of their sales.