Little impact anticipated for UK SMEs if free movement of labour restricted post-Brexit
Nearly 9 out of every 10 (86%) of the UK’s SMEs will either benefit or feel little to no impact if free movement of labour is restricted post-Brexit, according to research from Close Brothers Asset Finance.
The results were obtained from the Close Brothers Business Barometer, a quarterly survey that questions over close to 1,000 UK and RoI SME owners and senior management across a range of sectors and regions.
“While this result might be surprising to some, it’s important not to forget that a significant minority (14%) of businesses feel they will actually suffer,” said Neil Davies, CEO, Close Brothers Asset Finance. “And it becomes even more nuanced when unpicking the detail; for example, businesses with a turnover of over £10m feel they will be more affected than smaller organisations, with 26% feeling they will be negatively impacted, against only 5% of firms turning over less than £250k.
“From a sector perspective, it comes as no surprise that the transport and logistics sector stands to be the most affected (23% ‘suffer’) since European drivers are currently propping up the shortfall in UK drivers.”
Non-UK labour
Nearly a fifth (18%) of UK businesses rely on non-UK labour to run effectively, with this figure rising to 36% for London-based firms.
“Bigger firms in the SME market are the most reliant on non-UK labour and appear to have the biggest vested interest in understanding what is being done to ensure the rights of non-UK workers,” said Neil.
Does your business rely on non-UK labour to run effectively? (based on turnover)
|
Under £250k |
£250k - £500k |
£501k - £1m |
£1.1m - £5m |
£5.1m - £10m |
> £10m |
|
|
Yes |
7% |
21% |
23% |
22% |
38% |
32% |
|
No |
91% |
74% |
70% |
74% |
61% |
54% |
|
Don't know |
2% |
5% |
7% |
4% |
1% |
15% |
Labour costs
Four times as many firms think Brexit will lead to an increase in labour costs against those who feel it will decrease (29% v 7%), while the remaining 64% are of the opinion that it will remain unchanged.
“These results reflect the uncertainty currently being felt by SMEs,” said Neil. “No-one currently knows how the cost of labour will be affected, but again London businesses are the ones bracing themselves for an uplift in cost, with 45% expecting them to increase. Interestingly, the results for Wales mirror those of London.
“From a sector perspective, nearly half (48%) of Print firms are expecting a labour cost increase.”
Non-UK labour force distribution across the UK
What percentage of your employees are non-UK?
|
0% - 20% |
21% - 40% |
41% - 60% |
61% - 80% |
81% - 100% |
|
|
UK combined |
70% |
17% |
8% |
3% |
3% |
|
North East England |
65% |
20% |
9% |
1% |
5% |
|
North West England |
74% |
19% |
5% |
- |
2% |
|
Yorkshire/Humberside |
75% |
18% |
5% |
1% |
1% |
|
East Midlands |
78% |
10% |
7% |
1% |
3% |
|
West Midlands |
67% |
22% |
5% |
3% |
2% |
|
East Anglia |
73% |
16% |
7% |
1% |
3% |
|
Greater London |
43% |
27% |
17% |
11% |
2% |
|
South East England |
72% |
16% |
9% |
- |
3% |
|
South West England |
69% |
19% |
7% |
3% |
3% |
|
Scotland |
81% |
8% |
9% |
3% |
- |
|
Wales |
79% |
13% |
6% |
2% |
- |
|
Northern Ireland |
86% |
12% |
- |
- |
2% |
Methodology
All figures, unless otherwise stated, are from a GMI survey conducted in December 2017/January 2018. The survey canvassed the opinion of nearly 1,000 SME owners across the UK and RoI and across several industries on a range of issues affecting their businesses.
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