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Brexit – you might not always get what you want…

By Anton Nebbe, Head of PR at Close Brothers Asset Finance

Every quarter for the past decade or more Close Brothers Asset Finance has surveyed around 1,000 UK and Irish business owners across a range of sectors, regions and sizes. Each ‘wave’ returns a large amount of data on key topical issues of the time, some of which we use to turn into press releases and thought leadership pieces.

I manage the survey – what we call the Business Barometer - and decide which questions to ask. In this blog I delve deeper into the data, picking out key points of interest but without providing too much in the way of commentary – I let the stats speak for themselves for you to draw your own conclusions.

This time I focus on the rather thorny subject of Brexit, unpicking the responses from each question.

I want it - but will I get it?

The first question we asked SME business owners was – in relation to Brexit - what do you want to happen? We then asked them what they actually think will happen.

The results were very instructive – it’s clear that the extended delay in leaving Europe has caused many on both sides of the debate to question whether the result will be enacted.     

The top-level result tells us that 4 out of every 10 (39%, to be precise) business owners feel the UK should ‘just leave the EU’, yet just 27% think it will actually happen.

28% of respondents felt the UK should remain a full member of the EU against 12% who think this will be the eventual outcome; 14% feel the UK should leave the EU with a withdrawal agreement that puts us outside of the Customs Union and a further 14% want an agreement that keeps us inside the Customs Union.

Only a handful of business owners (6%) want there to be a long extension to Article 50 yet close to a quarter (23%) think this will be the eventual outcome.

How does this play out regionally? The ‘leave’ sentiment is strongest in the North East (51%) and East Midlands (55%), while it’s lowest in East Anglia (36%) and Scotland (37%).

Looking at turnover, at 54% it’s companies with revenues between £5m to £10m who are the keenest to leave the EU, followed by those turning over £1m to £5m (47%).

Of the sectors surveyed, it’s construction (50%) that is the most eager for the UK to leave the EU followed by wholesale & distribution (47%) and engineering (45%).

Business outside the UK – sales & purchases

In total, just over a quarter – 26% - of businesses surveyed make little to no purchases from the EU; this rises only 2% to 28% for sales made in the EU.

For companies with a turnover under £250k these figures jump to 53% (purchases) and 50% (sales). Unsurprisingly, the larger the turnover, the more purchases and sales are made both from and in the EU.

A significant minority - 14% - make over 80% of their purchases in the EU with a similar number (15%) relying on Europe for most of their sales as well.

Preparations for Brexit 

Nearly half of companies surveyed have made no specific preparations for Brexit – in fact, three times as many selected this option over the next three:

  • Set aside a cash buffer to cover possible cost increases
  • Increased stocks we hold of our finished goods
  • Worked with our EU customers (who will become importers) to adapt their systems

The other, less popular, options to close out the list were:

  • Changed contracts with EU customers or suppliers to take account of data regulations
  • Changed our systems to reflect the change in our status for trading with EU
  • Have had to certify products in the EU
  • Set up an EU company or subsidiary
  • Hedged foreign currencies

It was companies at the smaller end of the scale, understandably, who had made no preparations for Brexit, with nearly all of those turning over under £250k selecting this option.

Impact on staffing

To date, Brexit has – predictably - not changed the staffing requirements for many SMEs. What it has done; however, is cause 230 of those who took part in the research to either admit that they’ve had to increase staff working hours or redeploy them elsewhere in the organisation. A further 101 have taken on outside contractors.