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Brexit: view from the SMEs

Following the latest survey (conducted in August & September 2019 by an independent specialist research firm) of 850 SMEs from across the UK by Close Brothers Asset Finance, several themes have emerged from the research, which are detailed in this release.

  • 25% of ‘remainers’ have changed their minds about leaving the EU
  • 60% are 'fully aware' of the implications of a no-deal Brexit
  • SMEs are split down the middle about whether the UK will leave with a deal

Comment and analysis is provided by Neil Davies, CEO, Close Brothers Asset Finance.

Quarter of SMEs’ minds changing about Brexit

25% of former ‘remainer’ SME business owners surveyed have changed their mind about wanting to leave the EU; 13% of the ‘leavers’ now want to remain while the other 62% have not had a change of heart.

“We think this is a combination of wanting certainty, rather than the current fluid position and an element of greater understanding of how Brexit will affect their individual business.

“When we unpick the results, our research tells us that the smaller the business, the less likely they are to have changed their mind, with 76% of SMEs with fewer than 10 employees not having had a change of mind. 

“This is probably because their exposure to, and reliance on, Europe is likely to be less than their larger counterparts.”

Strong awareness of implications of ‘no deal’ Brexit

Six out of 10 SMEs are of the view that they are well versed on what a ‘no deal’ Brexit will mean for the UK.

The remaining 40% are split between those saying the uncertainty is making them want to remain in the EU (27%), and those hoping Brexit still goes ahead (13%).

“Because many smaller businesses have limited dealings with Europe on a day-to-day basis, it’s giving them confidence that they’ll be able to continue as before.

“Companies at the larger end of the scale are the most prepared because they’ve got both the resources and the motivation given their exposure to Europe; they are incentivised to be as prepared as they can be.”

SMEs split about whether UK will leave the EU with no deal

SMEs are split almost down the middle when asked if they think the UK will leave the EU with a withdrawal deal (56% yes / 44% no) on 31 October.

Regionally, this rises to 75% ‘yes’ in London while Scotland is the least certain at 41%.

Surprisingly, small businesses are less confident than their larger counterparts (see table, below).

“The truth is, at this stage no-one really knows whether or not we’ll be leaving the EU without a deal and this is reflected in the results.

“When the survey was conducted we expected there to be more clarity on the issue of ‘no deal’; however, with the recent political turmoil, it remains unclear.”

Brexit continuing to cause uncertainty among SMEs

Uncertainty caused by Brexit is continuing to impact businesses’ ability to trade, with 63% admitting to that it has. The remaining 37% have felt no difference, stating they are trading as they were before the vote.

The sectors most affected are manufacturing and engineering, with 75% admitting their trading capability has been impacted by Brexit.

Small businesses are the least impacted, with 60% having felt little to no difference.

“The sectors with the most exposure to Europe are the most unsettled because they aren’t clear about how Brexit will impact their customers, import tariffs, supply chain, raw goods, etc.

“As has been widely reported, many firms have been stockpiling while pausing their spending and growth plans until an element of certainty returns.”

Methodology

All figures, unless otherwise stated, are from a Lightspeed survey conducted in August & September 2019. The survey canvassed the opinion of over 933 SME owners across the UK and Ireland (except for Brexit-related questions) and across several industries on a range of issues affecting their businesses.